US stocks rebound from losing week

Joshua Freed, AP Business Writer

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.

At 9:50 a.m. Eastern, the Dow Jones industrial average was up 169 points, or more than 1 percent, at 15,925. 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.

In Europe, the FTSE 100 index of leading British shares was up more than 1 percent, while Germany's DAX rose almost 2 percent. The CAC-40 in France was 1.5 percent higher. In Japan, the Nikkei 225 index slid 1.6 percent despite a report from Japan's central bank showing improved business sentiment.

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

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The Gayly – December 16, 2013 @ 10:10am