NEW YORK—U.S. stocks rallied Monday, as positive corporate earnings, more progress on European debt talks, and mergers and acquisitions activity sent shares higher.
The Dow Jones Industrial Average closed 104 points higher, or 0.9 percent. The S&P 500 Index also gained by 16 points or 1.3 percent. The Nasdaq Composite turned higher for the year, with gains of 62 points, or 2.4 percent.
In New York, industrial and financial shares performed the best, after heavy machinery maker Caterpillar Inc. reported better-than-expected quarterly earnings.
The Peoria, Ill.-based construction equipment maker reported that profits were 44 percent higher than last year, on record revenues for the quarter.
“Although there is a good deal of economic and political uncertainty in the world, we are not seeing it much in our business at this point,” Caterpillar’s CEO Doug Oberhelman said in a statement Monday. The company was also optimistic toward the future, projecting $58 billion in annual revenues for 2011, and a 10 to 20 percent growth in 2012 revenues.
Third quarter earnings were $1.14 billion, or $1.71 per common share. Topline revenues increased 41 percent to $15.7 billion, which is a record. Caterpillar is typically a bellwether for overall economic activity, as more construction could mean more jobs and business expansion.
In the health care sector, consolidation was the theme of the day. Cigna Corp., an insurance giant, announced Monday that it would acquire HealthSpring for $3.8 billion, which is a 37 percent premium over HealthSpring’s share price at last Friday’s close. HealthSpring is involved in the Medicare maintenance business.
Technology giant Oracle Corp. announced that it would acquire cloud computing service company RightNow Technologies Inc. for $1.5 billion. Toymaker Mattel Inc. and consumer products maker J.M. Smucker Company also announced mergers.
While investors are still awaiting a more comprehensive solution to Europe’s sovereign debt problems, there are signs that politicians are making progress.
There will be a eurozone meeting on Wednesday where officials are expected to hash out a massive plan, which will include the next steps to restructure Greek bonds, recapitalize the region’s ailing financial sector, and increasing the size of the EU bailout fund, also called the European Financial Stability Facility (EFSF).
While some investors had hoped a resolution would be reached last weekend, it was deferred to Wednesday’s meeting.
The blue-chip Euro Stoxx 50 increased 1.4 percent to 2,369 points, while London’s FTSE 100 rose 1.1 percent to 5,548. German DAX in Frankfurt gained 1.4 percent to 6,055. Major indices in Japan and Hong Kong also rose on Monday.
