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Dow and S&P End Near 2-1/2 Year Highs

Stocks ended higher Monday with the Dow and S&P 500 hitting their highest levels since June 2008 amid a flurry of M&A activity and several positive earnings news.

The Dow Jones Industrial Average rose 69.48 points Monday, or 0.57 percent, to close at 12,161.63, hitting another 2-1/2 year high. Stocks extended gains Friday to end the week on a high note, posting the best week in two month.

AmEx, Bank of America and JPMorgan led the blue-chip index higher. At least nine stocks on the Dow hit new highs. Pfizer and Kraft were among the laggards.

The S&P 500 rose 8.18 points, or 0.62 percent—also hitting a 2-1/2 year high—finishing at 1,319.05. The Nasdaq rose 14.69 points, or 0.53 percent—to hit a 3-1/4 year high—ending at 2,783.99.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose near 16.

Among the key S&P 500 sectors, financials, industrials and energy rose, while telecom slipped.

Bank stocks were mostly in the green led by Wells Fargo , Goldman Sachs and JPMorgan .

A flurry of M&A news was at the center of attention. Diversified industrial company Danaher agreed to buy medical diagnostics company Beckman Coulter in a transaction valued at about $6.8 billion. Beckman shares jumped 10 percent.

EnsCo said it will acquire rival PrideInternational for about $7.3 billion in a deal that would create the world's second-largest offshore oil and gas driller, according to the companies. Pride International shares soared almost 15 percent.

And struggling U.S. Internet company AOL has agreed to buy The Huffington Post for $315 million.

Meanwhile, Sanofi-Aventis is closing in on a roughly $20 billion deal to buy U.S. biotech group Genzyme while pausing to take a final look at the books, according to sources.

Basic materials stocks will be in focus as the price of copper hit a record highon concerns about supply and as economic data recently boosted the outlook for demand.

"Copper continues to make new highs, which is a good indication the global economy is strengthening," said Peter Cardillo, chief market economist at Avalon Partners. "Earnings continue to beat expectations and M&A continues. There's enthusiasm for equities in the U.S."

The dollar rose agains the eurofor the fourth consecutive session. Gold slipped slightly to finish the session at $1,348 an ounce and oil prices fell to settle at $87.35 a barrel.

Chesapeake Energy shares rose after the natural gas firm announced plans to raise $5 billion and trim its heavy debt load.

On the earnings front, health insurer Humana posted a lower quarterly net profit, hurt by expenses, but raised its 2011 profit forecast.

Hasbro reported weaker-than-expected revenue on tepid U.S. demand for games and puzzles in the biggest selling season of the year.

Loews' jumped more than 5 percent after the hotel chain reported earnings that rose 16 percent, helped by lower expenses and higher net investment income.

More than 70 percent of the S&P 500 companies have reported earnings above estimates so far, according to Thomson Reuters data. Investors expect aggregate earnings rose 37 percent in the last quarter, the highest estimate for that period in more than 10 months.

On the tech front, Apple shares rose after brokerage Susquehanna raised its price target on the iPod maker to $465 from $445. Cisco climbed after Wunderlich raised its price target on the firm to $24 from $22. Hewlett-Packard gained after JPMorgan added the computer maker to its "analyst focus list" and raised its price target on the firm to $57 from $55.

Ford Motor will increase production for deliveries to its U.S. dealers by 13 percent in the first quarter of 2011 and may add third shifts to some of its plants, according to Ford sales executives.

Rival Toyota is slated to report earnings on Tuesday before-the-bell. Other companies expected to post results include UBS , Sara Lee and Beazer Homes .

Meanwhile, President Obama said he wanted to lower the corporate tax rate and eliminate tax loopholes, requesting support from the business community to achieve the goal.

"Another barrier government can remove is a burdensome corporate tax code with one of the highest rates in the world,'' Obama said in a speech to the U.S. Chamber of Commerce business lobby group.

In the day's economic news, U.S. outstanding consumer installment credit shot upward in December as shoppers boosted their credit-card debt for the first time in more than two years, according to the Federal Reserve.

Total credit outstanding climbed $6.1 billion, nearly triple the $2.3 billion that Wall Street economists surveyed by Reuters had forecast, after an upwardly revised $2 billion increase in November.

Meanwhile, news that computer hackers had infiltrated the operator of the Nasdaq Stock Exchangecould be another blow to investor confidence, as Wall Street works to repair an image with investors and traders dented by last year's "flash crash."

Middle East Turmoil
Middle East Turmoil

Egyptian President Hosni Mubarak's new cabinetholds its first full meeting Monday since a civil uprising started nearly two weeks ago, with no concrete progress in talks with an opposition which demands his immediate exit.

Unrest in Egypt propelled North Sea Brent crude oil futures back above $100 a barrelon worries it could spread to other parts of the Middle East and north Africa, disrupting energy supplies.

In a sign of a more stable debt market in Europe, demand for Portugal's five-year syndicated bond is around 6 billion euros, double the minimum placement announced earlier, Treasury Secretary Carlos Pina said on Monday.

European shares climbed to close at their highest levels since September 2008, with miners gaining as copper reached record highs on supply concerns.

Coming Up This Week:

TUESDAY: NFIB small business index, Richmond Fed President speaks, Atlanta Fed President speaks, Dallas Fed President speaks, 3-year Treasury note auction; before-the-bell earnings from Toyota and UBS; after-the-bell earnings from Disney, McAfee and Take Two.
WEDNESDAY: Weekly mortgage applications, oil inventories, 10-year Treasury note auction, Bernanke testifies before U.S. House, Fannie/Freddie reform hearing, AmEx analyst meeting, HP announces new mobile strategy, Moody’s briefs on sovereign debt ratings; before-the-bell earnings from Coca-Cola, Nissan; after-the-bell earnings from Cisco, Activision Blizzard, MetLife, Prudential and WholeFoods.
THURSDAY: BoE announcement, jobless claims, wholesale trade, Atlanta Fed speaks, 30-year Treasury bond auction, Treasury budget, Ebay investor day, Verizon iPhone goes on sale; before-the-bell earnings from PepsiCo, Philip Morris and Sprint; after-the-bell earnings from Kraft and Expedia.
FRIDAY: International trade, consumer sentiment, Nokia analyst day; earnings from Discovery Communications.

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