Wall Street started the trading week fresh from a rally on Friday that had pulled the Dow Jones industrial average out of negative territory and sent it 2 percent higher for the year. The Nasdaq composite index joined the Dow in positive territory on Monday, up 1.7 percent for the year to date, while the Standard Poor’s 500-stock index, which measures the broader market, rose 1.2 percent.
At the close, the Dow was up 0.89 percent, 104.83 points, at 11,913.62 and the S. P. 500 was up 1.29 percent at 1,254.19. The Nasdaq gained 2.35 percent to 2,699.44.
The financial sector, materials and information technology were each about 2 percent higher in trading on Monday.
Analysts said that the markets had come out of the slump of the summer months to post solid gains since early October on the back of relatively encouraging news. They pointed to good third-quarter results in several bellwether companies, economic data that showed slow growth rather than none and glimmers of movement in Europe toward addressing its sovereign debt crisis.
“We have had a very substantial rally,” said Paul Zemsky, the chief investment officer of multiasset strategies at ING Investment Management. “Stocks were looking cheap from a valuation perspective.”
Strong manufacturing data from China on Monday helped drive a rally in Asian markets that carried through to other regions, said Keith B. Hembre, the chief economist and chief investment strategist at Nuveen Asset Management. “It is definitely a risk-on day,” he said.
Among the other drivers of the solid market performance Monday, analysts said, were mergers and corporate earnings.
A $3.8 billion acquisition of HealthSpring by the Cigna Corporation, which is seeking to expand in Medicare and senior care coverage, pushed Cigna shares up 1.4 percent at $45.34. HealthSpring’s shares jumped 34 percent to close at $53.71.
In another deal in the sector, Cubist Pharmaceuticals announced that it would acquire all of the outstanding shares of the Adolor Corporation, another drug company, for $4.25 a share in cash, a deal worth about $190 million. Adolor shares more than doubled, to $4.67, while Cubist shed 1.9 percent at $39.60.
The technology sector was helped by a 19 percent climb in RightNow Technologies shares to $42.94. Oracle said on Monday that it had entered into an agreement to acquire the company, which is a leading provider of cloud-based customer service, for $43 a share, or approximately $1.5 billion, net of RightNow’s cash and debt.
Sentiment was also helped, according to Eric Viloria, senior strategist at Forex.com, by remarks from William C. Dudley, the president of the Federal Reserve Bank of New York, who said that it was possible the Fed could do a new round of stimulus. Caterpillar, which analysts called a bellwether, helped to drive the industrials sector higher after the company reported third-quarter profit and sales that beat analysts’ forecasts. Its shares rose more than 5 percent to $91.77.
Mr. Viloria also said in a note that the markets showed “cautious optimism” regarding the European Union meetings.
The markets in the United States opened to news that Europe’s leaders had made some progress on a package of measures aimed at addressing their financial and economic problems.
A big issue that is still looming before a European summit meeting Wednesday is how to make a stability fund of 440 billion euros ($611 billion) sufficient to cover Spain and Italy, if necessary, in addition to Greece, Portugal and Ireland.
“Even if euro zone policy makers do manage to take a major step forward on Wednesday, this is only really the application of a much stronger bandage over the euro zone’s sovereign debt problems, rather than dealing with the root cause,” Howard Archer, an economist for IHS Global Insight, said in a research note.
The United States 10-year Treasury bond fell to 99 2/32, from 99 7/32 Friday. The yield was 2.23 percent.
Article source: http://feeds.nytimes.com/click.phdo?i=ebe9c77ef05109414e1a0587f15c17db
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