MARKET REPORT: Deals, outlooks rouse investors

— Another wave of corporate deal making stoked investors’ confidence in the economy and carried stocks sharply higher Monday.

Analyst upgrades of Alcoa Inc. and Intel Corp. and positive momentum on President Barack Obama’s health-care overhaul also helped drive a broad advance on the stock market. Major indexes closed off their highs of the day but still rose about 1 percent. The Dow Jones industrial average jumped into the black for the month.

Bond prices tumbled as stocks rose, pushing the yield on the benchmark 10-year Treasury note up to its highest level since August. The dollar strengthened, hurting commodities prices.

Stocks got an early boost Monday after French drugmaker Sanofi-Aventis SA announced plans to buy U.S. health-care products company Chattem Inc. for $1.9 billion, and mining equipment maker Bucyrus International Inc. said it planned to buy Terex Corp.’s mining equipment division for $1.3 billion. Dutch automaker Spyker Cars submitted a new offer to buy Saab from General Motors Co.

The deals announced Monday follow Exxon Mobil Corp.’s $29 billion takeover of XTO Energy Inc. last week.

The Dow rose 85.25, or 0.8 percent, to 10,414.14, after rising as much as 130 points earlier in the day. The Standard & Poor’s 500 index rose 11.58, or 1.1 percent, to 1,114.05, and the Nasdaq composite index rose 25.97, or 1.2 percent, at2,237.66.

Bond prices sank as investors abandoned the safety of government debt in favor of stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, climbed to 3.69 percent from 3.54 percent late Friday.

The dollar rose against other major currencies, making commodities more expensive for foreign buyers. Light, sweet crude for February delivery fell 70 cents to settle at $73.72 a barrel on the New York Mercantile Exchange. Gold also fell.

Monday’s surge in stocks helped lift the Dow into positive territory for the month, giving it a 0.7 percent gain. Many analysts believe stocks should finish out the year strong after several weeks of listless trading.

Historically, December is the best single month for stocks, with the S&P 500 index averaging a 1.6 percent gain. So long as economic and corporate news continues to be encouraging, analysts expect the market to keep its momentum going into the new year.

About three stocks rose for every one that fell on the New York Stock Exchange, where volume was 4.05 billion shares compared with 7.65 billion shares at the same time on Friday.

Volume was exceptionally high Friday as several types of options contracts expired and S&P made changes to the S&P 500. That index is the basis for many indexed mutual funds, so those funds were forced to alter their holdings to match the reconstituted index.

Business, Pages 24 on 12/22/2009

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