Stocks broke through a slump and posted strong gains on Monday, powered by two big corporate deals and a report that suggests the economy is getting stronger.
The Dow Jones industrial average is now up two trading days in a row and has reduced some of the losses from last week. It was the first gain in five days for the Standard & Poor’s 500 index.
Stocks have turned volatile ahead of a Federal Reserve meeting today, as investors bet on whether the central bank will dial back the stimulus that has boosted stock prices this year. All of the big indexes are up more than 20 percent for 2013.
Karyn Cavanaugh, market strategist with ING U.S. Investment Management, said she doesn’t expect such large returns next year — maybe more like 10 percent.
“But that’s actually good for investor confidence,” she said. “When they see these big huge numbers, I think they look at it with kind of a jaded eye and think, ‘Is that really sustainable? Maybe it’s already run its course so I want to get out.’”
As of 3:26 p.m. Eastern time, the Dow was up 134 points, or 0.9 percent, at 15,890, after rising almost 175 points in the morning. The Standard & Poor’s 500 index rose 12 points, or 0.7 percent, to 1,787. The Nasdaq composite was higher by 27 points, or 0.7 percent, at 4,028.
Two major deals caught investors’ attention: Chipmaker Avago Technologies is buying LSI Corp. for $6.6 billion. Avago was up $4.47, or 10 percent, to $50.12, while LSI rose $3.05, or 39 percent, to $10.97. And AIG is selling its aircraft leasing business for about $5.4 billion to Dutch leasing company AerCap. AIG has been selling major assets after getting a bailout during the financial crisis. Its shares rose 50 cents, or 1 percent, to $50.23. The Avago-LSI deal helped make tech stocks the biggest gainers among the 10 industries in the S&P 500, all of which rose.