11:30AM U.S. market averages rallied, boosted by merger deals. Opsware surged 36%.

U.S. market averages rallied in late Monday trading, driven by several multibillion-dollar deals in various sectors. Opsware (OPSW: chart) surged 36% after Hewlett-Packard (HPQ: chart) said it will buy the automation software maker for $1.6 billion to enhance its portfolio of business technology optimization software. United Rentals (URI: chart), equipment rental company, gained 2% after it agreed to be taken private by Cerberus Capital Management for $6.6 billion.

Oil service stocks continued to posted solid gains, benefiting from news that GlobalSantaFe (GSF: chart) and Transocean (RIG: chart) agreed to merge in order to create a combined company with an estimated enterprise value of $53 billion. The networking sector also showed considerable strength, helped by 6% advance in the shares of Tellabs (TLAB: chart) amid reports that the company will get a $7 billion takeover offer from Nokia Siemens.

Wireless, pharmaceutical, and utilities stocks also moved to the upside, while some healthcare provider and natural gas stocks bucked the upward trend. In late morning trading, the Dow Jones industrial average rose 113.24, or 0.82%, to 13,964.32. The Standard & Poor's 500 index rose 12.90, or 0.84%, to 1,547.00 and the Nasdaq composite index rose 17.43, or 0.655, to 2,705.03. Bonds were little changed, with the yield on the benchmark 10-year Treasury note flat at 4.95% from late Friday.


9:45AM Wall Street opened higher, lifted by strong earnings at Merck and Schering-Plough.

Wall Street opened higher, benefiting from robust profits in the pharmaceutical sector and news of a takeover in the oil services industry, financial and equipment-rental sectors.

The Dow was led higher by drug giant Merck (MRK: chart) which rose 6% after it posted better-than-expected 12% earnings increase in Q2 and lifted its annual earnings forecast. Rival Schering-Plough (SGP: chart) added 1% as both its quarterly revenue and earnings beat expectations.

Barclays (BCS: chart) improved its offer for ABN Amro (ABN: chart) to $93 billion and added a cash portion to it. ABN shares added 0.4%. In other deal news, United Rentals Inc (URI: chart), equipment rental company, agreed to be taken private by Cerberus Capital Management for $6.6 billion. Shares of United Rentals rose 2%.

Further in M&A action, Hewlett-Packard (HPQ: chart) said it will buy automation software maker Opsware Inc. (OPSW: chart) for about $1.6 billion. The computer company said the deal will enhance its portfolio of business technology optimization software. The Dow Jones industrial average was up 72.27 points, or 0.52%, at 13,923.35. The Standard & Poor''s 500 Index was up 7.84 points, or 0.51%, at 1,541.94. The Nasdaq Composite Index was up 8.12 points, or 0.30%, at 2,695.72.


9:00AM Buyout news and strong earnings boost pre-market mood.

U.S. stock futures moved to the upside on Monday, boosted by a multibillion-dollar deal in the oil drilling sector as well as stronger-than-expected earnings from drug makers Merck and Schering-Plough.

In buyout news, Transocean and GlobalSantaFe said that they agreed to combine to form a $53 billion drilling contractor. Further in M&A action, United Rentals (URI: chart) agreed to be taken private by affiliates of Cerberus Capital Management LP in a $4 billion cash deal. The stock gained 2.7% in pre-market trading. In deal speculations news, Tellabs (TLAB: chart) climbed 18% amid reports that Nokia Siemens Networks, the venture between Nokia (NOK: chart) and Siemens (SI: chart), is offering between $16. and $17 a share for it.

On the merger news front, Pharmaceutical giant Merck (MRK: chart) climbed 4.5% in pre-open trade amid 12% increase in Q2 profit. Schering-Plough (SGP: chart) rose 3.7% after it said its Q2 profit more than doubled. American Express (AXP: chart) and Texas Instruments (TXN: chart) are expected to release financial results later on Monday. S&P 500 futures rose 4 points at 1,549.10 and Nasdaq 100 futures tacked on 2.25 points at 2,057.50. Dow industrial futures climbed 32 points, helped by the Merck results.


8:15AM Transocean and GlobalSantaFe agreed to merge to form a $53 billion drilling contractor.

Transocean, Inc. (RIG: chart) and GlobalSantaFe Corp. (GSF: chart) announced an agreement to merge to form a $53 billion drilling contractor. Under the terms of the deal, Transocean shareholders will receive $33.03 in cash and 0.6996 shares of the combined company for each Transocean share they hold. At the same time, GlobalSantaFe stockholders will get $22.46 in cash and 0.4757 shares of the combined company for each GlobalSantaFe share they hold.

The new company will be named Transocean. It will retain principal offices in Houston and trade on the NYSE under the RIG symbol. After the completion of the merger, GlobalSantaFe''s Chairman Robert Rose will become chairman of the new company while Transocean current CEO Robert Long will keep the same position in the merged firm.