US stocks rose Monday on strong earnings from Caterpillar, a spate of merger activity, and signs that Europe is making progress in tackling the eurozone debt crisis.
The Dow Jones Industrial Average rose 104.83 points (0.89 per cent) to finish at 11,913.62.
The tech-heavy Nasdaq Composite added a hefty 61.98 points (2.35 per cent) to 2,699.44, while the S&P 500, a broader measure of the markets, advanced 15.94 points (1.29 per cent) to 1,254.19.
"Investors appear encouraged that European leaders are making progress toward a plan to ease the debt crisis. Positive earnings and M&A announcements are also providing a lift," said Scott Marcouiller at Wells Fargo Advisers.
Caterpillar, the world's leading construction and equipment maker, surged 5.0 per cent to $US91.77 after reporting a 44 per cent profit rise on robust revenues. It raised full-year estimates to the top end of its prior forecast.
Often considered a bellwether of the global economy, Caterpillar said it had its best-ever quarter for sales and an order backlog at an all-time high.
Cigna rose 1.4 per cent to $US45.34. The global health insurance and health service company unveiled a $3.8 billion takeover of HealthSpring, which serves seniors receiving Medicare health insurance benefits. HealthSpring leaped 33.7 per cent to $US53.71.
Mattel added 2.1 per cent to $US28.26. The world's leading toymaker announced it was buying HIT Entertainment, a maker of popular pre-school toys, including brands Thomas & Friends and Barney, for $US680 million in cash.
Business hardware and software company Oracle rose 2.3 per cent to $US32.87 after saying it had clinched a $US1.5 billion deal to buy RightNow Technologies, a cloud-based software firm specializing in customer service. RightNow soared 19.4 per cent to $US42.94.
Adding to the upbeat Wall Street sentiment was an HSBC report on manufacturing activity in China, showing it hit a five-month high in October in the world's second-largest economy.
Shares in aluminum giant Alcoa jumped 3.4 per cent to $US10.58.
The Wall Street action followed solid gains Friday, with the Dow adding more than two per cent, amid optimism that EU leaders were moving ahead with a comprehensive deal to stabilize the eurozone.
Bond prices fell. The yield on the 10-year Treasury rose to 2.23 per cent from 2.21 per cent Friday, while that on the 30-year Treasury slipped to 3.28 per cent from 3.26 per cent.
Bond yields and prices move in opposite directions.
