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Stocks extend gains on earnings, merger news

Several big acquisitions and a strong earnings report from Loews Corp. pushed stocks higher in afternoon trading Monday.
/ Source: The Associated Press

Several big acquisitions and a strong earnings report from Loews Corp. pushed stocks higher in afternoon trading Monday.

Pride International Inc. jumped 16 percent after Ensco PLC, a London-based oil rig operator, said it would buy the offshore driller for $7.3 billion.

Beckman Coulter Inc. gained 10 percent after Danaher Corp. said it plans to buy the manufacturer of medical diagnostic tests for $5.8 billion.

Loews Corp. rose 4 percent. The company, which owns Loews hotels and the property insurer CNA Financial Corp., said falling costs helped earnings rise 16 percent even as revenue slipped slightly. The results were higher than analysts were expecting and helped push financial companies broadly higher.

According to preliminary calculations, the Dow Jones industrial average rose 69.40 points, or 0.57 percent, to 12,161.40. The Standard & Poor's 500 index rose 8.16, or 0.62 percent, to 1,319.03. The Nasdaq composite rose 14.69, or 0.53 percent, to 2,783.99.

Joseph Saluzzi, co-head of equity trading at Themis Trading, said that with no major economic reports due out this week, mergers and earnings are sure to drive stocks higher. Saluzzi thinks investors are getting too optimistic about the economy. Anything that can be construed as good news is likely to give them a reason to buy stocks, he said.

"The path of least resistance right now is up," Saluzzi said. "People are beginning to assume the market is going higher. It's momentum."

Financial companies rose 1.6 percent, the largest gain of any of the 10 company groups that make up the S&P index.

Lorillard Inc. rose 2 percent after the company, which makes Newport and Maverick cigarettes, said it increased both sales and prices for its cigarettes.

AOL Inc. dropped 2.5 percent after saying it would buy the Huffington Post, a news and opinion website, for $315 million. Arianna Huffington, the site's co-founder and political pundit, will join AOL's management team.

Toy maker Hasbro Inc. rose 1 percent after reporting earnings that were lower but still beat analysts' expectations.

Monday was the first day of trading since the company that owns the Nasdaq exchange admitted Saturday it had been hacked late last year. The problem did not affect any trades, the company said.

The Dow and the S&P 500 surpassed significant milestones last week after Pfizer Inc., UPS Inc. and other large companies reported higher earnings. There was also a strong report on manufacturing. The Dow closed above 12,000 and the S&P 500 index above 1,300 for the first time in two and a half years. Both indexes are trading at levels last seen in June 2008, three months before the worst of the financial crisis.