(Bloomberg) — The Dow Jones Industrial Average posted its biggest advance in eight weeks as equities extended quarterly gains amid corporate mergers and optimism central banks will support global growth.
Exxon Mobil Corp. and JPMorgan Chase & Co. added more than 2 percent as oil companies and banks rallied. Catamaran Corp. jumped 24 percent after UnitedHealth Group Inc. agreed to buy it. Horizon Pharma Plc rose 15 percent after saying it will acquire Hyperion Therapeutics Inc. A Standard & Poor's index of homebuilders climbed after pending home sales in February rose more than forecast.
The Dow climbed 286.04 points, or 1.6 percent, to 17,998.70 at 1:09 p.m. in New York, on track for its best gain since Feb. 3. The S&P 500 Index advanced 1.2 percent to 2,086.45. The gauge is up 1.3 percent in the first quarter, maintaining its longest streak of quarterly gains since 1998. The Nasdaq Composite Index increased 1 percent.
"Stocks are being driven in the short-term by the potential for Chinese quantitative easing that they hinted at over the weekend, as well as the mergers and buyouts happening in the equity market," Andrew Brenner, the head of international fixed income for National Alliance Capital Markets, said by phone.
Federal Reserve Chair Janet Yellen said Friday that the central bank will probably raise rates this year, with subsequent increases taking place gradually, without following a predictable path. China's central bank chief said the government can do more to support growth in the world's second-largest economy.
Data Watch
Consumer purchases rose less than projected in February, indicating the biggest part of the U.S. economy will find it hard to sustain momentum after the best quarter since 2006. Adjusted for inflation, spending declined for the first time in almost a year. Incomes climbed 0.4 percent in February for a second month, propelled by a jump in dividends.
More Americans than forecast signed contracts to purchase previously owned homes in February, indicating a pickup in the housing market ahead of the spring selling season. The index of pending sales increased to the highest since June 2013. An S&P gauge of homebuilder stocks added 1.8 percent, with all 11 members advancing, to its highest since June 2007.
The U.S. economy grew at a slower pace in the fourth quarter than economists had estimated, a Commerce Department update showed on Friday.
Other reports this week may show the Institute for Supply Management's manufacturing gauge slipped in March, while payrolls rose at a slower pace.
Broad Rally
All 10 primary groups in the S&P 500 advanced Monday, after the benchmark last week fell the most since January, extending a monthly loss.
Energy and financial companies paced today's rally, rising at least 1.4 percent. Valero Energy Corp., Exxon Mobil and Phillips 66 gained at least 2 percent. JPMorgan Chase and PNC Financial Service Group Inc. climbed more than 2.4 percent to bolster the financial group.
Catamaran jumped 24 percent after UnitedHealth's OptumRx agreed to buy the provider of pharmacy benefit management services for about $ 12.8 billion. PBM competitor Express Scripts Holding Co. added 3.5 percent. UnitedHealth advanced 2.6 percent.
Horizon Pharma climbed 15 percent to an all-time high after agreeing to buy Hyperion Therapeutics for $ 1.1 billion to gain drugs to treat rare metabolic diseases. Hyperion rose 7.8 percent to a record.
Teva Pharmaceutical increased 2.4 percent to a five-year high after agreeing to buy Auspex Pharmaceuticals Inc. for about $ 3.5 billion in cash to gain drugs that curb tics and other movement disorders. Teva will begin a tender offer of $ 101 a share for Auspex, which rallied 42 percent.
Altera Retreats
DreamWorks Animation SKG Inc. rose 5.4 percent to its highest since November after its "Home" film delivered $ 54 million in opening-weekend ticket sales, beating projections.
Analog Devices Inc. jumped 9.8 percent to its highest in more than 14 years after analysts at Barclays Plc upgraded the stock to overweight from equalweight and set a target price of $ 70, 10 percent above where shares now trade.
Altera Corp. lost 4 percent, after soaring 28 percent Friday following a report that Intel Corp. was in talks to buy the company. Morgan Stanley analyst Joseph Moore downgraded Altera to equalweight from overweight, while Macquarie Research analyst Deepon Nag cut shares to neutral from outperform. Intel slipped 1.4 percent, the only Dow component trading lower.
The Chicago Board Options Exchange Volatility Index fell 5.6 percent to 14.22. The gauge, know as the VIX, jumped 16 percent last week, the most since January.
To contact the reporter on this story: Oliver Renick in New York at orenick2@bloomberg.net
To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net John Shipman, Namitha Jagadeesh
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