(Reuters) – Stocks rose more than 1 percent on Monday, feeding on acquisition news and hopes European politicians will come up with solutions to the region’s debt crisis.
Stocks brushed off soft data on manufacturing and homebuilder sentiment that added to a string of weak economic news that took the S&P 500 near a one-year low last week.
Motorola Mobility Holdings Inc jumped nearly 57 percent to $38.40 on Google Inc’s offer to buy the company for about $12.5 billion in cash. Google dropped 1.1 percent to $558.12.
Also, Time Warner Cable Inc will buy cable operator Insight Communications from Carlyle Group for $3 billion in cash to broaden its presence in the Midwest.
“The corporate sector has become the most important buyer of U.S. equities right now,” said Doug Cliggott, managing director of U.S. equity strategy at Credit Suisse. “Some really good value was created by (last week’s) downdraft.”
The Dow Jones industrial average gained 138.27 points, or 1.23 percent, to 11,407.29. The Standard & Poor’s 500 Index rose 17.13 points, or 1.45 percent, to 1,195.94. The Nasdaq Composite Index added 32.90 points, or 1.31 percent, to 2,540.88.
The market declines that took the S&P 500 to its lowest point since September last week reflected weak U.S. and global economic data and the perception that leaders in Europe and the United States were running out of options to help their sputtering economies.
Still, a meeting on Tuesday by French and German politicians was expected to result in initiatives needed to restore confidence in credit and other markets.
Stocks and other high-yielding assets like the euro posted gains on Monday, supporting that view.
“I’d read the euro strength as a sigh of relief (in the markets),” Credit Suisse’s Cliggott said.
The latest economic reports were not encouraging. A gauge of New York State manufacturing contracted for the third month in a row in August, while homebuilder sentiment remained stuck at historic lows. Still, they did little to dent stocks.