MARKET SNAPSHOT: Stocks Rally; S&P 500 Ends Right Below Record

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MARKET SNAPSHOT: Stocks Rally; S&P 500 Ends Right Below Record


By Victor Reklaitis, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks climbed on Monday, boosted by M&A activity, an upbeat German confidence report and bets that the S&P 500's foray into new high ground could spur further buying.

The main indexes finished with solid gains, although they ended well off their session highs as buying momentum faded. The S&P 500(SPX) had been on pace to score a record closing high but didn't deliver, with gains erased in the last hour of trading.

The benchmark index rose 11.46 points, or 0.6%, to finish at 1,847.71 -- just below its Jan. 15 record close at 1,848.38. It had been up more than 22 points intraday. Humana Inc.(HUM) closed up 10.6%, performing best among S&P 500 components.

The Dow Jones Industrial Average(DJI) gained 105.83 points, or 0.7%, to end at 16,209.13, led by UnitedHealth Group Inc. (UNH), which jumped 3%. Shares in Humana and UnitedHealth, both health insurers, rallied following a JPMorgan note saying Medicare Advantage reimbursements will drop less than expected next year

The Nasdaq added 29.56 points, or 0.7%, to close at 4,292.97, nabbing its highest close since April 2000.

"You had a pretty positive number out of Germany," said Quincy Krosby, market strategist at Prudential Financial, referring to the latest Ifo survey on German business confidence.

"The deal flow is also beginning to gain momentum, and that's very positive for markets," she added.

Check out a recap: MarketWatch's markets team live bloged the U.S. stock market session on Monday.

RF Micro Devices (RFMD) said Monday that it will merge with TriQuint Semiconductor Inc. (TQNT) in an all-stock deal. RF Micro closed up 21%, while TriQuint surged 26%.

Jos. A. Bank (JOSB) shares rose 9.1% after Men's Wearhouse Inc. (MW) upped its offer for its rival to $63.50 a share. The amended offer is conditioned on Jos. A. Bank terminating its recent agreement to buy Eddie Bauer. Men's Wearhouse shares rose 7.5%.

Monday's deal news follows other recent M&A events, including Facebook Inc.'s( FB ) purchase of WhatsApp, Comcast Corp.'s( CMCSA ) plan to buy Time Warner Cable Inc.(TWC) and Actavis PLC's( ACT ) agreement to buy Forest Laboratories Inc. (FRX)

Krosby said the announced deals can have a "halo effect," spurring some investors to think they're going to see more deals in other sectors.

Some market analysts have said they see limited gains for stocks in the near term, citing resistance for the S&P 500 as the benchmark index trades around its record level.

"Every time you get to these levels there's always a back and forth," Krosby told MarketWatch. She said at some point, something will push the S&P 500 to a new record close, or it won't be able to break out.

In overseas markets, Asian stocks closed mostly lower on news of slower growth for Chinese home prices and reductions in real-estate lending. European shares rallied, boosted in part by Germany's Ifo business-climate survey coming in slightly better than expected.

U.S. economic news was on the light side on Monday. Federal Reserve Chairwoman Janet Yellen is scheduled to appear before a Senate panel on Thursday, and a fresh estimate on U.S. fourth-quarter GDP is expected on Friday. Read MarketWatch's preview for this week's economic reports: Is the economy merely suffering from a cold?

Among individual U.S. stocks, Netflix Inc. (NFLX) closed up 3.4%, erasing its early losses, after the company reached an agreement with Comcast Corp.( CMCSA ) in which it will pay Comcast to ensure smooth viewing for Netflix's video- streaming subscribers in the U.S.

EBay Inc. ( EBAY ) climbed 3.1% as the online auctioneer traded barbs with activist investor Carl Icahn.

In other markets, gold prices rose, while oil also advanced. The dollar edged down against its major rivals.

More news from MarketWatch:

Market is riding tech M&A wave

Don't try to time the market

How to make money from ETFs' runaway growth

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