Stocks traded higher on Monday, supported by takeover news and data showing manufacturing growth accelerated last month, while bond prices gained in a flight-to-safety bid as police investigated attempted car bomb attacks in Britain.
The dollar fell to a seven-week low against the euro and weakened in relation to other major currencies in ongoing concern over U.S. housing sector weakness, and oil prices fell over $1 per barrel in profit-taking from gains last week.
Stocks climbed after Canada's largest telephone company, BCE Inc., on Saturday agreed to a proposed US$32.8 billion buyout from a group that includes the Ontario Teachers Pension Plan.
Also, the Institute for Supply Management on Monday said its manufacturing index rose in June from May, showing strength in the sector.
I would view it as a positive number in terms of economic activity. It's pre-holiday trading right now, and a strong ISM is an excuse to take the (stock) market up, said James Awad, chairman of Awad Asset Management in New York.
U.S. markets will be closed on Wednesday for the Independence Day holiday.
The Dow Jones industrial average was up 89.18 points, or 0.67 percent, at 13,497.80. The Standard & Poor's 500 Index was up 10.98 points, or 0.73 percent, at 1,514.33. The Nasdaq Composite Index was up 21.27 points, or 0.82 percent, at 2,624.50.
Bonds benefited from a safety bid linked to attempted car-bomb attacks in London late last week and an attack on Glasgow's airport on Saturday. The benchmark 10-year note was trading 4/32 higher in price for a yield of 5.01 percent from 5.03 percent late on Friday.
The dollar fell to within 1 cent of a record low against the euro, extending Friday's heavy losses. Investors continue to show concerns over the U.S. subprime mortgage market, which were amplified over the past week by trouble at two Bear Stearns-managed hedge funds that had invested in the risky loans.
The U.S. Dollar Index was down 0.59 percent at 81.395 from a previous session close of 81.881. The euro was up 0.61 percent at $1.3623 from a previous session close of $1.3541, while against the Japanese yen the dollar was down 0.67 percent at 122.31 from a previous session close of 123.14.
August crude oil on the New York Mercantile Exchange was down 69 cents, or 0.98 percent, at $69.99 per barrel. Traders pointed to profit-taking after the contract's settlement on Friday at the highest level since last August.
Earlier in the day, investors sold European stocks and bought government bonds and gold on security concerns from the weekend bomb plots in Britain, along with the strong oil prices.
Spot gold prices rose $8.10, or 1.25 percent, to $657.00.