NEW YORK -- Corporate deal news gave the US stock market a lift on Monday as a bidding contest erupted for a discount retailer. Stocks also climbed after reports of diplomatic efforts to broker a cease-fire in the conflict in Ukraine.
The Standard & Poor's 500 index rose 16.68 points, or 0.9 percent, to 1,971.74. The Dow Jones industrial average gained 175.83 points, or 1.1 percent, to 16,838.74. The Nasdaq composite gained 43.39 points, or 1 percent, to 4,508.31.
The stock market is bouncing back after a bout of summer volatility pushed the S&P 500 down earlier this month to its lowest level since May. The index is now less than 1 percent below its record close of 1,987 reached on July 24. Investors had become skittish on concerns that the tensions between Russia and Ukraine were escalating.
"Investors are focusing back on earnings and fundamentals and not as worried about some of those geopolitical pressures right now," said Chris Gaffney, a senior market strategist at Everbank Wealth Management.
Dollar General jumped after making a bid for retailer Family Dollar, a rival discount store. The offer topped a bid made last month by Dollar Tree, another discount retailer. Airlines were also among the big gainers as the price of oil slumped.
Dollar General was the biggest gainer in the S&P 500. The company's stock rose $6.68, or 11.6 percent, to $64.14 after it made a $8.95 billion bid to buy Family Dollar. That's higher than the $8.5 billion bid that Dollar Tree made for Family Dollar last month.
Sterne Agee recommended buying Dollar General's stock, saying that the company could benefit from significantly higher earnings following the acquisition.
Family Dollar, the target of the bid, also jumped on the news, climbing $3.75, or 5 percent, to $79.81. Dollar Tree fell $1.34, or 2 percent, to $54.26.
Airline stocks were among the gainers as well after the price of oil fell to its lowest level since April as fears of supply disruptions from Iraq eased. Fuel is a big component of airlines' costs.
Southwest Airlines rose $1.06, or 4 percent, to $30.82. United Continental climbed $1.83, also 4 percent, to $47.84.
Despite the increased volatility caused by the tensions in Ukraine and elsewhere, stocks are still an attractive investment, said Dan Curtin, a global investment specialist for JPMorgan Private Bank.
Inflation remains and low and corporate earnings remain strong. Earnings growth in the second quarter was 10.2 percent for companies in the S&P 500, compared to 4.9 percent in the same period a year ago and 3.4 percent in the first quarter, according to data from S&P Capital IQ.
Later this week, investors will focus on the Federal Reserve. Policymakers are winding down their economic stimulus and will likely start to raise interest rates at some point next year.
On Wednesday, the Fed will release the minutes from its July policy meeting, and on Friday Fed Chair Janet Yellen will give a speech at an annual conference of central bankers, policy experts and academics from around the world at Jackson Hole, Wyo.
Prices for U.S. government bonds fell. The yield on the 10-year Treasury note rose to 2.39 percent from 2.34 percent on Friday.
Prices for metals futures ended mixed. Gold fell $6.90 to $1,299.30 per ounce, silver rose 11 cents to $19.64 per ounce and copper was little changed at $3.11 per pound.
Business on 08/19/2014