Wall ST higher as merger deals continue

The buyout news, particularly the possibility of an enormous deal that would unite Dutch bank ABN Amro Holding NV with British bank Barclays PLC, propelled stocks higher as investors theorised that companies remain upbeat about the economy if they are willing to cut new deals.

The advance kicked off an important week for economic data; the first reading, a report from the Chicago Federal Reserve, said regional manufacturing slowed in January.

The market was also waiting for Tuesday’s start of the US Federal Reserve’s two-day meeting on interest rates. While few expect the Fed will adjust short-term interest rates, investors will be looking for any change in the central bank’s posture that could hint at where rates are headed in the coming months.

Given the volatility that has returned to the marketplace and the upcoming statement from the Fed, market watchers are not ruling out more big swings in stocks going forward.

“I think the markets are very sentiment driven. It does also appear that when the global markets see recovery in one area they all seem to move up and when they see concern in another market they all seem to move down,” said Subodh Kumar, global investment strategist at Subodh Kumar & Association in Toronto.

According to preliminary calculations, the Dow rose 115.76, or 0.96%, to 12,226.17, its biggest one-day gain since March 6, when the index climbed more than 150 points.

Broader stock indicators also rose sharply. The Standard & Poor’s 500 index gained 15.11, or 1.09%, to 1,402.06, and the Nasdaq composite index advanced 21.75, or 0.92%, to 2,394.41.

Bonds fell as stocks made gains. The yield on the benchmark 10-year Treasury note rose to 4.57% from 4.55% late Friday. The dollar was mixed against other major currencies, rising to 117.59 yen from 116.73 yen late Friday. Gold prices rose.