Stocks on Monday posted their third solid advance in four sessions, as investors cheered a higher bid for investment bank Bear Stearns and optimism swelled that the Wall Street scare was fading. Trading volume was moderate.
The Dow Jones industrial average closed up 187.32 points, or 1.5 percent, at 12,548.64. Caterpillar, Hewlett-Packard and Boeing were among the biggest contributors to the broad rally. Only three of the 30 Dow stocks ended lower.
Traders were cheered at the opening of Monday’s session by better-than-expected quarterly results from jewelry retailer Tiffany and drugstore chain Walgreen.
Winning stocks outnumbered losers by more than a 4-1 ratio among New York Stock Exchange stocks and nearly 3-1 among Nasdaq stocks.
The Nasdaq composite index rose 68.64, or 3 percent, to 2326.75, led by Apple, Research In Motion and Google. Nasdaq trading volume totaled 2.27 billion shares, down from 2.70 billion shares Thursday.
JPMorgan agreed to pay $10 a share for financially troubled Bear Stearns, up from an initial offer of $2.
Treasury securities lost ground as stocks advanced on a report of an unexpected increase in existing-home sales in February.
The dollar advanced against major currencies, reflecting speculation that an improved economic outlook would enable the Federal Reserve to stop cutting U.S. interest rates.
Crude oil prices fell.
Treasury auctions: Interest rates rose at the weekly auctions of 3- and 6-month Treasury bills. The discount rate for 3-month bills was 1.20 percent, up from 1.10 percent a week ago. The rate for 6-month bills was 1.55 percent, up from 1.31 percent.
The coupon-equivalent investment rates were 1.22 percent for 3-month bills and 1.58 percent for 6-month bills.