By Riva Gold and Amrith Ramkumar 

The Dow Jones Industrial Average rose Monday as investors weighed the latest deal activity and looked ahead to central-bank signals expected later in the week.

The Dow industrials climbed 107 points, or 0.4%, to 25777, while the S&P 500 added 0.3%. Both indexes were on track for a third straight session of gains, with the S&P 500 less than 1% from its January record. The tech-heavy Nasdaq Composite was recently up less than 0.1%.

A busy year for mergers and acquisitions continued Monday as PepsiCo agreed to buy home-carbonation company SodaStream International Ltd. for $3.2 billion, the latest move by the cola company to diversify away from sugary sodas and salty snacks. Pepsi shares were up less than 0.1%, while SodaStream added 9.6%.

Meanwhile, Tyson Foods said it would buy Keystone Foods, a supplier of chicken nuggets to McDonald's and other companies, for $2.2 billion as part of its strategy to bolster its protein offerings and expand globally. Tyson shares rose 1.5%.

Despite worries about weakness in emerging markets and the trade fight between the U.S. and China, stocks have shown resilience this summer and M&A activity has surged.

"The signal that we can take away from that is that sentiment has not been hit sufficiently by the trade uncertainty that it puts business decisions in question," said Gabriela Santos, global market strategist at J.P. Morgan Asset Management.

Investors are now waiting to see if the S&P 500 can set a record after the index came within 0.5% of that level earlier this month before retreating.

Stocks tied to commodities and global growth lifted large indexes Monday, with the energy, materials and industrials sectors rising.

Some analysts expect strong U.S. economic and earnings figures to continue buoying large indexes and were encouraged by the latest trade developments late last week. Negotiators from the U.S. and China have been working on talks to try to end their trade standoff ahead of planned meetings between President Trump and Chinese leader Xi Jinping at multilateral summits in November, The Wall Street Journal reported.

Worries about a growth-hindering trade war have hurt stocks around the world and other risk assets such as commodities in recent months. Minutes from the Federal Reserve's August meeting, due later this week, as well as the Kansas City Fed's annual Jackson Hole symposium, could show how central bankers view the latest developments, analysts said.

Investors were also watching the Turkish lira Monday, as the currency's sharp declines this summer have fueled anxiety about the declines spreading to other emerging markets. It fell 2.3% against the dollar Monday.

S&P Global Ratings and Moody's Investors Service on Friday downgraded Turkey one notch further below investment grade, citing recent extreme economic and financial volatility.

The Trump administration also rejected an effort by Turkey to tie the release of a U.S. pastor with relief for a large Turkish bank facing billions of dollars in U.S. fines, a senior White House official said.

"When it comes to Turkey specifically, I wouldn't say they're out of the woods just yet," said Mohammed Kazmi, a portfolio manager at Union Bancaire Privée, saying the country's central bank will have to raise interest rates significantly to reassure investors.

Combining Turkey's situation with a recent strengthening of the dollar, "it brings the focus back on short-term external debt levels within emerging markets, especially as it looks like the Fed will continue hiking [rates]," he said.

Some analysts worry that the dollar's strength could also pose a challenge for large multinational firms by making U.S. exports less competitive in global markets. It has also challenged some commodity investors by making materials priced in dollars more expensive for overseas buyers.

On Monday, the WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, edged down less than 0.1%. The yield on the benchmark 10-year U.S. Treasury note declined to 2.832%, according to Tradeweb, from 2.873% Friday. Yields fall as bond prices rise.

Elsewhere, gains in commodity-linked firms pushed the Stoxx Europe 600 up 0.6% after the index posted its biggest weekly decline since June.

Earlier, stocks in Asia were mostly higher Monday after an upbeat finish Friday on Wall Street. Hong Kong's Hang Seng added 1.4%, while the Shanghai Composite Index rose 1.1% after five sessions of declines.

Write to Riva Gold at riva.gold@wsj.com and Amrith Ramkumar at amrith.ramkumar@wsj.com

(END) Dow Jones Newswires

August 20, 2018 13:20 ET (17:20 GMT)

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