[R]4:15PM Merger and Earnings news power another advance in averages.[/R]

-Dow closed up 182.67 points, Nasdaq up 41.45 and S&P500 up 20.62.
-Yield on 10-year bond closed at 5.04% and 30-year bond closed at 5.09%.
-Crude oil up 62 cents to close at $75.05 per barrel.
-Gold down $7 to close at $613.20 per ounce.

-Asian Markets closed lower however India led the gainers with 1.28% rise and Taiwan led the decliners with 0.94% loss. Indonesia, Australia and South Korea fell more than 0.5%.

-European Markets rallied across the region with at least 2% gain in local country averages. Germany closed up 2.33% and UK and France closed up 2.00%.

-Latin American Markets rallied led by 2.74% rise in Argentina, 2.1% gain in Brazil and 1.95% advance in Mexico.

Typical of Monday, for last many months now, it was mega merger news that drove averages higher. Earnings news only supported the advance further in the mid-day trading. Investor group made up of Bain Capital, Merrill Lynch and KKR agreed to offer $21 billion for HCA (HCA: chart), hospital chain operator. The 6.5% premium from the Friday’s close is one of the lowest premiums offered in some of the largest deals in recent years. The investor group proposed an offer of $51 per share, and at close stock traded near $49.20. Hospital Corporation of America, widely known as HCA has faced financial headwinds in the recent years. The company paid $1.7 billion in 2002 to settle charges of Medicare over-billing.

Increasingly Wall Street firms are taking their capital and acting as private equity investors. Goldman Sachs has come under heavy fire this year for a similar role it played in taking New York Stock Exchange private and then merging it with electronic trading firm Arca Capital. Goldman acted as advisor on both the side of the deal. Merrill Lynch is now playing a role of private equity investor and is acting as advisor to several players in the healthcare industry.

Low premium is likely to spur other large players into action and new bid is likely from other Wall Street firms and private equity houses, but in Monday’s trading stock did not jump higher than proposed price of $51 per share.

European stocks jumped across the region and closed up at least 2% in UK, France, Germany and Switzerland. Widely expected deal between Fiat and Tata Motors of India appears to be on hold for several days. But, Fiat released three major ventures with Russian Severstal to make light trucks in Russia, produce heavy commercial vehicles with Chinese company SAIC and form a joint venture between Fiat Auto Finance and Credit Agricole to finance Fiat vehicle purchases. A deal previously announced between Tata Motors and Fiat for manufacturing and sourcing from India and selling Fiat products in India is still not finalized.

Efforts to salvage Doha round of talks for World Trade Organization appears to have lost all the momentum as the world’s six leading nations failed to agree on ways to cut farm subsidy.

[R]11:30AM Stock markets extended gains.[/R]
U.S. stock markets continued to post strong gains in morning trading, with the three main averages rising to new highs for the session. Positive sentiment was generated by news about one of the largest leveraged buyouts in history. Hospital operator HCA (HCA: chart) agreed to be acquired by an investor group of three private equity firms- Bain Capital, Kohlberg Kravis Roberts, and Merrill Lynch- for approximately $33 billion, including the assumption or repayment of approximately $11.7 billion of debt.

In other M&A news, Advanced Micro Devices (AMD: chart) announced that it agreed to acquire ATI Technologies (ATYT: chart) for $5.3 billion in cash and stock. HCA added 3.6%, ATI shares shot up 17.2%, while AMD stock fell 4.7%.

Positive earnings news from drug makers Schering-Plough (SGP: chart) and Merck (MRK: chart) also contributed to the upward move. Merck rose 3%, while Schering gained 4.8%. The Dow made a triple-digit gain lofted by strong gains for Pfizer (PFE: chart), Home Depot (HD: chart), and J.P. Morgan (JPM: chart).

Among advancing sectors, the airline sector moved notably higher as a decrease by the price of oil helped to ease concerns about higher fuel costs. Brokers and bankers led the financial sector higher. Networking stocks also posted strong gains in morning trading due to bargain hunting. The computer hardware sector also benefited from bargain hunting, with Dell (DELL: chart) posting a notable gain after it dragged the sector lower in the previous session. In late morning trading, the Dow gained 132.24, or 1.2%. The Standard & Poor''s 500 index was up 15.50, or 1.25%, and the Nasdaq jumped 32.51, or 1.61%. Bonds were higher, with the yield on the 10-year Treasury note falling to 5.03% from 5.04% late Friday.


[R]9:45AM Stocks rallied on mergers and earnings.[/R]
Stocks rallied at opening on a couple of multibillion-dollar acquisitions and upbeat earnings reports from major pharmaceutical companies. Oil futures retreated as energy traders awaited developments in talks over the violent conflict between Israel and Lebanon.

The positive sentiment was generated by a spate of acquisitions as they helped offset investor concerns about a weakening economy. Three equity firms offered to buy hospital operator HCA (HCA: chart) for $21.3 billion and assume $11.7 billion of debt. In another deal, AMD (AMD: chart) agreed to acquire graphics chipmaker ATI Technologies Inc. for $5.4 billion in cash and stock. Shares of ATI Technologies (ATYT: chart) stood out among gainers in early morning, rising 17%. Upbeat earnings from drug-makers also contributed to the market''s momentum. Dow component Merck & Co. (MRK: chart) said its Q2 earnings more than doubled to top analyst estimates, while Schering-Plough (SGP: chart) swung to a profit, also beating expectations.

The airline sector turned in one of the market''s best performances, benefiting from a decrease by the price of oil which helped to ease concerns about the impact of higher fuel costs. Significant strength was visible in the brokerage sector, with Morgan Stanley (MS: chart) and Lehman Brothers (LEH: chart) posting notable gains. The biotechnology, networking, and retail sectors showed considerable strength as well. Among biotech stocks, PDL BioPharma (PDLI: chart) gained on brokerage upgrade of its stock rating. Meanwhile, a decrease by the price of gold sent gold stocks to the downside. In the first hour of trading, the Dow Jones industrial average gained 63.16, or 0.58%.The Standard & Poor''s 500 index was up 6.53, or 0.53%, and the Nasdaq composite index rose 17.59, or 0.87%. Bonds slipped, with the yield on the 10-year Treasury note edging up to 5.05% from 5.04% late Friday.


[R]9:00AM Stock futures pointed to a higher opening on mergers and earnings.[/R]
U.S. stock index futures indicated market opening on a positive note Monday morning, reflecting several major takeover deals as well as better-than-expected earnings news.

In merger-and-acquisition news, Advanced Micro Devices Inc (AMD: chart), the No. 2 supplier of computer processors, agreed to acquire graphics chip maker ATI Technologies Inc. (ATYT: chart) for $5.4 billion in cash and stock. ATI surged 15.9%to $19.20, while AMD stock fell 6.1% to $17.15, both on the Inet electronic brokerage system. Hospital operator HCA Inc. (HCA: chart) is reportedly close to an agreement to be acquired by an investor group for about $21 billion.