updated 11/1/2005 9:07:55 AM ET 2005-11-01T14:07:55

Wall Street ended the month of October with a modest advance Monday, as a turnaround in personal spending and a flurry of acquisition activity reassured investors worried about a faltering economy. A decline in oil prices also carried stocks higher.

Major Market Indices

News that spending rose 0.5 percent in September — reversing a 0.5 percent August decline — came as another sign of the economy’s resilience following hurricanes Katrina and Rita. Last week, the Commerce Department reported better-than-expected gross domestic product growth for the July-September quarter.

While the upbeat spending data bolstered the retail and technology sectors, Steven Goldman, chief market strategist at Weeden & Co., also linked Monday’s rally to a broad recovery from last week’s lows and typical end-of-the-month trading as hedge and mutual funds try to boost returns. He also cited strong gains in the European markets.

“Basically we had market sentiment get a bit too one-sided,” Goldman said about recent volatility on Wall Street. “Stocks were getting in place to rebound.”

The Dow Jones industrial average finished the day up 37.30 points, or 0.4 percent, having surged almost 173 points to its biggest one-day gain since late April on Friday. The broader Standard & Poor’s 500-stock index closed Monday up 8.60 points, or 0.7 percent, while the Nasdaq composite index jumped 30.42 points, or 1.5 percent.

An unexpected gain in the Chicago Purchasing Managers’ Index also fueled the market’s momentum, with the index climbing to 62.9 from September’s reading of 60.5. Economists expected a decline to 57.4.

The price of a barrel of crude oil eased below the $60 level after the Organization of Petroleum Exporting Countries said it has enough spare capacity to cover an expected rise in demand this winter.

Kellogg Co., the world’s largest cereal maker, reported its quarterly profit rose 11 percent as cereal and snack-food demand drove up sales 7 percent. The company lifted its yearly outlook, but that figure and its 2006 view fell short of Wall Street predictions. Shares of Kellogg sank $2.29 to $44.17.

On the acquisition front, Swiss drugmaker Novartis AG said it is paying $5.1 billion for the 58 percent of Chiron Corp. it does not already own. Novartis sweetened its offer after Chiron refused a previous $4.5 billion bid. Shares of Novartis rose 42 cents to $53.82, and Chiron’s stock price climbed 74 cents to $44.14.

Saks Inc. is selling its 142 northern department stores , operating under the Carson Pirie Scott, Younkers and Herberger’s names, to Bon-Ton Stores Inc. for $1.1 billion. Last spring, Saks sold its Profitt’s and McRae’s stores to Belk Inc. for $622 million. Saks jumped $1.49 to $18.15, and Bon-Ton gained $3.39 to $20.05.

Barrick Gold Corp. offered to buy out Canadian rival Placer Dome Inc. for $9.2 billion in cash and stock. The $20.50-per-share deal is a 24 percent premium to Placer’s closing price Friday. Barrick tumbled $1.95 to $25.25, while Placer rose $3.44 to $19.95.

Overseas, Japan’s Nikkei stock average gained 1.2 percent. In Europe, Britain’s FTSE 100 jumped 2.0 percent, Germany’s DAX index climbed 2.6 percent and France’s CAC-40 added 2.3 percent.

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