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US stocks sharply higher
US stocks sharply higher on corporate deals and signs of stronger economy
Associated Press
2013-12-16 11:42 PM

U.S. stocks rose sharply on Monday, powered by two big corporate deals and news that suggests the economy is getting stronger.

The gains follow a down week. Stocks have turned volatile ahead of a Federal Reserve meeting that begins on Tuesday, as investors bet on whether the central bank will start to reduce the stimulus that has boosted stock prices this year.

The Dow Jones industrial average was up 169 points, or more than 1 percent, at 15,925, in the first half-hour of trading. The Standard & Poor's 500 index rose 16 points, or almost 1 percent, to 1,792. The Nasdaq composite was higher by 40 points, or 1 percent, at 4,041.

All 10 industry groups in the S&P 500 were higher, led by technology stocks.

Two major deals caught investors' attention: Chipmaker Avago Technologies is buying LSI Corp. for $6.6 billion. Avago was up $4.36, or almost 10 percent, to $50, while LSI rose $3.05, or 39 percent, to $10.96. AIG is selling its aircraft leasing business for about $5.4 billion to Dutch leasing company AerCap. AIG has been selling major assets after getting a bailout during the financial crisis. Its shares rose $1.10, or 2.2 percent, to $50.83.

Also Monday, the Federal Reserve said factory production accelerated in November as auto production surged. The gains in manufacturing could help boost economic growth.

Just last week, such positive reports were making investors nervous. That's because they feared that the Fed would think that the economy is doing so well that its $85 billion in monthly bond-buying is no longer needed.

However, economists are almost unanimous in believing that the Fed will not begin winding down its stimulus program just yet. It will release a statement and projections for the economy Wednesday.

Oil rose 71 cents to $97.31 a barrel on the New York Mercantile Exchange.

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