The S&P 500 hit a two-week high on Monday on the back of strong earnings, while a flurry of acquisitions indicated corporate America continues to see untapped value in the market.
Annualised third-quarter earnings from S&P 500 components are expected to have risen 1.1 per cent last quarter, following four quarters of contraction, according to Thomson Reuters I/B/E/S data.
Of the 120 companies that have reported so far, 78 per cent have beaten analyst expectations, above the long-term average of 63.5 per cent.
“Consensus is earnings are going to continue to improve in part due to favorable energy prices and to strong consumption patterns here in the US,” said Chad Morganlander, portfolio manager at Stifel Nicolaus in Florham Park, New Jersey.
Wall Street signaled skepticism that AT&T would be allowed by regulators to purchase Time Warner Inc for a planned $85.4 billion.
Shares of both companies fell as analysts scrutinised the deal, with AT&T down 1.7 per cent at $36.86 and Time Warner Inc down 3.1 per cent at $86.74.
But competitor T-Mobile US jumped to its highest since August 2007 after it raised its forecast for customer additions for the year and said the AT&T-Time Warner deal could help T-Mobile carve out more market share.
T-Mobile shares ended up 9.5 per cent at $51.19.
The Dow Jones industrial average rose 77.32 points, or 0.43 per cent, to 18,223.03, the S&P 500 gained 10.17 points, or 0.47 per cent, to 2,151.33 and the Nasdaq Composite added 52.43 points, or 1 per cent, to 5,309.83.
TD Ameritrade fell 4.4 per cent to $35.46 after it said it would buy privately held Scottrade Financial Services in a deal valued at $4 billion.
B/E Aerospace jumped 16.4 per cent to $58.89 after aircraft component maker Rockwell Collins said it would buy the company in a deal valued at $6.4 billion plus the assumption of $1.9 billion in debt. Rockwell was down 6.2 per cent at $79.21.
“Overall merger and acquisition activity will continue, due in part to low debt financing costs,” said Stifel's Morganlander.
The S&P 500 posted 18 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 110 new highs and 45 new lows.
About 5.8 billion shares changed hands in US exchanges, below the 6.4 billion daily average over the last 20 sessions.