Stocks moved out of bear territory Monday as oil retreated more than $4 a barrel, easing inflation fears, and technology got a boost from two of its largest companies.
Major indexes each posted gains of 0.5 percent more off hte opening bell, with the Nasdaq showing the sharpest early rise of nearly 1 percent as Yahoo and Microsoft renewed merger talks and Apple unveiled a new smartphone.
CNBC learned that the much-discussed merger between search giants Yahoo and Microsoft still has legs as corporate heads continue to talk. Financier Carl Icahn sent a letter to shareholders indicating he had spoken to Microsoft CEO Steve Ballmer, who is still interested in discussing a merger.
And Apple opened to the upside as its 3G phone debuts to much fanfare.
Oil prices eased below $141 with investors hoping for a stronger dollar but nervous about the outcome of a dispute between Iran and the West over Iran's nuclear program.
Some of Wall Street's mainstays were helping move the market in a positive direction, as the averages closed in bear market territory before the July 4 holiday.
In the auto industry, General Motorsis planning to cut thousands of white-collar jobs and is considering whether it should sell or stop production of more of its brands, The Wall Street Journal reported.
Yahoo led gainers on the Nasdaq and S&P 500, while GM was setting the pace for the Dow.
Merck was one of only three Dow components moving to the downside, following a downgrade on the stock from UBS.
Earnings season officially kicks offwith Dow component Alcoa reporting results on Tuesday after the bell. Alcoa shares gained about 1.2 percent premarket as investors anticipated good numbers from the aluminum company.
In merger and acquisition news, NBC Universal, the parent of CNBC, along with private equity firms Blackstone Group and Bain Capital, said Sunday it will buy The Weather Channel fromLandmark Communications. Landmark will receive $3.5 billion.
NBC CEO Jeff Zucker said on CNBC that the move amplifies the network's stable of strong news programming. NBC is owned by General Electric , which reports earnings Friday.
"You think about adding the Weather Channel to that, you really see the news and information strength of this company," Zucker said. "That's what I'm really proud of."
Also, Merrill Lynchwill decide whether it will sell its stake inBlackRockearly this week and will also consider selling its stake in Bloomberg, CNBC has learned.
Merrill Chief Executive John Thain will likely sell no more than a 25 percent stake in BlackRock but that situation could change depending on the size of Merrill's writedowns, according to people inside BlackRock.
Also in mergers and acquisitions, German group Fresenius unveiled a $3.7 billion deal to buy U.S. firm APP Pharmaceuticals to enter the world's biggest drug market.
Disney shares were likely to be under pressure as the entertainment giant was hit by a downgrade by Lehman Brothers.
And more bad news came for real estate and retail, as store closings and cutbacks turned the second quarter into the worst for strip mall owners in 30 years, with cash-strapped consumers turning to discount stores, a report by real estate research firm Reis showed.