Positive euro-zone and US data support markets

US stocks advance on rise in mergers and business activity

US stocks closed higher on Monday with the rise in merger activity lifting market sentiment. The dollar strengthened on positive economic data.

The live dollar index data show the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, added 0.1% to 98.718. The Dow Jones industrial average gained 0.4% to 18222.89 led by Microsoft and Boeing shares. The S&P 500closed 0.5% higher settling at 2151.32 led by technology and consumer staples stocks. The Nasdaq composite ended 1% higher at 5309.83. Investor confidence was boosted by news AT&T Inc. agreed to buy Time Warner Inc for $85 billion in cash and stock, with Rockwell Collins Inc. announcing it would pay $6.4 billion for B/E Aerospace Inc. Investors consider the willingness of companies to spend their cash reserves on mergers and acquisitions bullish for equity market. Markets have been trading sideways recently and earnings reports haven’t shown a reversion of the falling earrings trend yet that could support the breakout higher for equity indexes. Economic news on the other hand were positive with the preliminary reading of Markit’s October purchasing managers’ index rising to 53.7 from 51.5. This was deemed as further indication of strengthening economy supporting Fed’s stated plans for hiking rates if incoming data are strong: the chance for a 25 basis point rise in rates at December meeting rose to 68% from 64% the previous day, according to CME Group’s FedWatch tool. Today at 15:00 CET August Case-Shiller Composite-20 House Price Index will be released. The tentative outlook is positive for the dollar. At 16:00 CET October Consumer Confidence index will be published by the Conference Board. The tentative outlook is positive. At the same time Richmond Fed’s Manufacturing Index for October will come out, it is expected to show a decline in manufacturing activity.