By Donna Kardos Yesalavich
U.S. stocks rose Monday following better-than-expected retail sales and as hope rose for a rescue of Ireland, although a disappointing reading on New York-area manufacturing limited the gains.
The Dow Jones Industrial Average (DJI) climbed 49 points, or 0.4%, to 11242, in early trading. Alcoa, Inc. (AA) was the measure's best performer, up 1.2%, while Johnson & Johnson (JNJ) was also strong with a 1.1% increase.
Just a handful of the Dow's 30 components were in the red, led by Caterpillar, Inc. (CAT) . The heavy-equipment giant fell 1.3% after saying it will buy mining company Bucyrus International (BUCY) for about $7.6 billion.
Under the agreement, Caterpillar will pay $92 for each Bucyrus share -- a 32% premium to Friday's closing price. Shares of Bucyrus, which is not a Dow stock, surged 29% to $90.
The Nasdaq Composite (RIXF) advanced 0.6% to 2533. The Standard & Poor's 500 index (SPX) added 0.5% to 1205, with all its sectors in positive territory.
The gains came as investors were betting that the European Union will eventually foist a financial rescue package on Ireland, despite repeated declarations from Dublin that a bailout was unneeded. Irish and Portuguese yield premiums over German debt narrowed on a German-led push for a resolution to Ireland's debt issue in order to contain further contagion in other European markets.
Also in the euro zone, the Greek government vowed to press ahead with tough fiscal reforms despite an upward revision in its 2009 deficit by the European Union's statistics agency, Eurostat. In a statement following the release of the revised data, the finance ministry said Greece had already surpassed its 2010 budget goals by shrinking its deficit to 9.4% of gross product product this year after a bigger-than-expected effort to cut the country's funding gap.
In the U.S., data showed U.S. retail sales surged in October, topping expectations on robust car sales and solid spending for a broad array of merchandise going into the holiday shopping season. Retail sales rose 1.2% last month, the biggest rise since March and larger than the 0.8% increase that was expected.
However, excluding autos, all other retail sales rose 0.4%, just shy of the 0.5% gain that was expected.
Also keeping Monday's climb in check, the November reading of New York-area manufacturing activity from the New York Fed came in at negative 11.14, down from 15.73 in October and below economists' expectations for a reading of 13.00. Measures of new orders, employment and prices received all fell.
Meanwhile, the Federal Reserve's latest attempt to boost the U.S. economy is coming under fire from Republican economists and politicians, threatening to yank the central bank deeper into partisan politics. A group of prominent Republican-leaning economists, coordinating with Republican lawmakers and political strategists, is launching a campaign this week calling on Fed Chairman Ben Bernanke to drop his plan to buy $600 billion in additional U.S. Treasury bonds.
The U.S. Dollar Index (DXY) , tracking the U.S. currency against a basket of six others, climbed 0.3%. Treasurys fell, lifting the yield on the 10-year note (UST10Y) to 2.87%. Crude-oil futures rose above $85 a barrel while gold futures edged higher.
Among stocks in focus, BHP Billiton (BHP) abandoned its US$39 billion bid for Canadian fertilizer company Potash Corp. of Saskatchewan (POT), raising questions about the growth prospects of the world's biggest miner amid increasing resistance from governments and global regulators to major takeovers. BHP's U.S. shares edged up 1.9% while Potash fell 1.4%.