Stocks rose on Monday following a spike in corporate dealmaking and news that retail sales jumped to the highest level in seven months in October.
Consumer spending rose 1.2 per cent last month thanks to higher demand for cars, the Commerce Department reported. The gain was nearly double what analysts were expecting. Shares of Ford Motor rose 4.2 per cent following the announcement.
Caterpillar, the world's largest construction machinery maker, agreed to buy mining equipment maker Bucyrus International Inc for $7.6 billion in cash, a 32 per cent premium over the company's closing price on November 12. Shares of Caterpillar rose 2.7 per cent.
Data storage company EMC Corp also announced that it had reached a deal to buy competitor Isilon Systems Inc for $2.2 billion in cash. It is offering $33.85 per share, a 29 per cent premium over its closing price on Friday.
The push for mergers and acquisitions is a good sign for investors, said Uri Landesman, the president of Platinum Partners, a hedge fund in New York City. "It's a statement that companies are moving out from under the bombshells of 2008 and 2009 and that they don't think there will be another disaster," he said.
Corporations are holding records amount of cash on their balance sheets. Using that cash to buy rivals or to expand into new areas could be a sign that companies are less concerned about the possibility that that economy will slide into another recession soon.
The Dow Jones industrial average rose 73.07, or 0.7 per cent, to 11,265.65 in early afternoon trading.
The broader Standard & Poor's 500 index gained 7.26, or 0.6 per cent, to 1,206.47, while the technology-focused Nasdaq composite index rose 11.35, or 0.5 per cent, to 2,529.56.
Every industry group within the S&P 500 rose. Financial companies gained 1.4 per cent to lead the index. Shares of Morgan Stanely gained 3.1 per cent, while shares of JP Morgan Chase and Wells Fargo both rose 2 per cent.
All but six of the 30 companies in the Dow Jones industrial average rose. Caterpillar's gains made it the top performing stock in the index, while Walt Disney's one per cent drop made it the laggard.
In corporate news, Lowe's Companies Inc reported a 19 per cent rise in profit on tight cost controls. Its shares rose 1.6 per cent. Urban Outfitters Inc and Nordstrom Inc will report earnings after the market close.
Akamai Technologies fell 6.6 per cent following a ratings cut by analysts at Oppenheimer. The company, which helps companies speed the delivery of applications and video on web pages, has seen its shares rise more than 80 per cent so far this year to make it one of the best performing stocks in the S&P 500.
The dollar rose 0.5 per cent against an index of other currencies. The euro was down 0.7 per cent against the dollar at $1.3606 amid reports that Ireland was in talks with its European neighbours over how to deal with its financial troubles.
In addition to Ireland's debt woes, investors were also worried about international pushback on the Federal Reserve's plan to buy $600 billion in Treasury bonds, which US trading partners say will further weaken the dollar, and a weak revenue forecast from network equipment maker Cisco Systems Inc.
Ireland's finances are under strain after the government bailed out five banks after the country's real estate boom collapsed. Investors are fearful that Ireland could become the next European country to require a bailout, as Greece did this past May. Irish officials say they aren't applying a lifeline from Europe's bailout fund.
