Stocks rose in early trading on Monday after six weeks of declines for the S&P 500 left indexes oversold and equities at more attractive levels.
In a sign that valuations are more enticing, deals in the insurance, apparel and communications technology sectors were announced since the market closed Friday.
The S&P 500 has tumbled nearly 7 percent on the back of a barrage of soft economic data after closing on April 29 at its highest level in nearly three years.
The good news is that short-term momentum indicators are at an extreme oversold level and we are not seeing signs of a new bear market, technical analysts at MF Global in New York said in a client note.
Worries about a global economic slowdown have hovered over equities markets, with investors expecting the S&P 500 to slip toward its March low near 1,250 before a rebound.
The market has been oversold over the last six weeks, so a short-term rebound on short-covering is not out of the question, said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.
The Dow Jones industrial average <.DJI> rose 54.83 points, or 0.46 percent, to 12,006.74. The Standard & Poor's 500 Index <.SPX> gained 5.94 points, or 0.47 percent, to 1,276.92. The Nasdaq Composite Index <.IXIC> added 13.40 points, or 0.51 percent, to 2,657.13.
Insurer Allied World Assurance Co Holdings Ltd
Also, VF Corp
clothing brands, will buy shoemaker Timberland Co
Diversified manufacturer Honeywell International Inc
Merger activity is likely (to continue) because of the low interest rates, and it's also attractive from an operational point of view, said Rick Meckler, president of investment firm LibertyView Capital Management in New York. That will be a continued positive (for equities).
(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)