Strong retail sales, Caterpiller deal drive Monday stocks

Midday Dow at 11,269, up 77 points.

NEW YORK (AP) — Stocks rose Monday following a spike in corporate dealmaking and news that retail sales jumped to the highest level in seven months in October.
Consumer spending rose 1.2 percent last month thanks to higher demand for automobiles, the Commerce Department reported. The gain was nearly double what analysts were expecting. Shares of Ford Motor Co. rose 5.5 percent following the annoucement.
Caterpillar, the world’s largest construction machinery maker, said it would buy mining equipment maker Bucyrus International Inc. for $7.6 billion in cash, a 32 percent premium over the company’s closing price on Friday. Shares of Caterpillar rose 2.7 percent.
Data storage company EMC Corp. also announced that it had reached a deal to buy competitor Isilon Systems Inc. for $2.2 billion in cash. It is offering $33.85 per share, a 29 percent premium over its closing price on Friday.
The push for mergers and acquisitions is a good sign for investors, said Uri Landesman, the president of Platinum Partners, a hedge fund in New York City. “It’s a statement that companies are moving out from under the bombshells of 2008 and 2009 and that they don’t think there will be another disaster,” he said.
Corporations are holding records amount of cash on their balance sheets. Using that cash to buy rivals or to expand into new areas could be a sign that companies are less concerned about the possiblity that that economy will slide into another recession soon.
The Dow Jones industrial average rose 66.07, or 0.6 percent, to 11,258.65 in afternoon trading.

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