US stocks began the new quarter with a rally on Monday, boosted by a new wave of take-over activity and data showing a pickup in manufacturing activity in June.
A surprise rise in the Institute for Supply Management's factory index to its highest in more than a year helped to lift shares of large manufacturers, such as Caterpillar Inc and United Technologies Corp Canada's largest telephone company, BCE Inc, agreed to a US $32.6 billion buyout from a group that includes the Ontario Teachers Pension Plan.
"The predictions of the demise of the take-over market were a little overstated, and there are a lot of good companies to be taken over," said Edward Hemmelgarn, chief investment officer of Shaker Investments in Cleveland. "The reality is that interest rates for corporate debt are still pretty low compared to where price-to-earning ratios are."
The Dow Jones industrial average was up 120.56 points, or 0.90 percent, at 13,529.18. The Standard & Poor's 500 Index was up 14.39 points, or 0.96 percent, at 1,517.74. The Nasdaq Composite Index was up 27.17 points, or 1.04 percent, at 2,630.40.
The benchmark 10-year US Treasury note was up 3/32, with the yield at 5.0141 percent. Yields have retreated from recent highs around 5.25 percent, easing concerns about rising borrowing costs for companies. Caterpillar's stock rose 2.7 percent to $80.48, while United Technologies gained 1.8 percent to $72.23.
If completed, the BCE buyout would be the world's largest, surpassing the still-pending $31.8 billion buyout of Texas power company TXU Corp US-listed shares of BCE rose 4 percent to $39.39.
In other telecommunications deals, AT&T Inc said it will buy rural wireless communications services company Dobson Communications Corp for $2.8 billion in cash. Dobson shares shot up 11.7 percent to $12.40 on the Nasdaq. Shares of British cable operator Virgin Media Inc climbed 18.7 percent to $28.95 after the company said it had received a bid approach from an unnamed group.
Bank of New York Mellon rose 6.5 percent to $44.13 after the company announced the completion of the merger that combines Mellon Financial Corp and The Bank of New York Co. The news on the M&A front was not all rosy. Shares of Trump Entertainment Resorts tumbled after the Atlantic City casino operator said a buyout deal fizzled.
Trump shares slid nearly 18 percent to $10.34 on the Nasdaq. Shares of BlackBerry maker Research In Motion extended gains after news of stronger-than-expected quarterly results last week. RIM shares surged 6.6 percent to $213.12 after hitting a record $213.91.
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