Investors looking for reassurance about the health of the global economy received just that Monday.
Stocks extended their rally into a third week after global regulators agreed to new rules for how much money banks must hold in reserves, China reported its economy remains robust and companies announced a flurry of takeovers.
"The package of catalysts is a perfect backdrop for a market trying to confirm global economic growth," said Quincy Krosby, a market strategist at Prudential Financial. Dealmaking and the expansion in China further reduced worries about the economy falling back into recession, Krosby said.
The Dow Jones industrial average rose 81 points for its eighth gain in the past nine days. The Dow did close off its high after some traders pulled money out of retail stocks ahead of the government's monthly retail sales report due out Tuesday.
But overall sentiment remained positive, pushing major indexes to their highest closes in more than a month and the Standard & Poor's 500 and Nasdaq composite indexes back into positive territory for the year.
Hewlett-Packard Co. agreed to purchase security software provider ArcSight Inc. and Dollar Thrifty Automotive Group Inc. said it accepted Hertz Global Holdings Inc.'s acquisition offer. Acquisitions are often a sign that companies are confident the economy is going to expand soon.
Global regulators agreed to reforms that could help avoid another credit crisis like the one that plagued financial markets worldwide in 2008 and early 2009. Banks will gradually have to increase their reserves to protect against potential losses.
"The agreement itself was a little lighter than expected," said Mitch Schlesinger, managing director at FBB Capital. Because reserve requirements will be rolled out slowly and not be quite as strong as expected, it reduces short-term worries that banks would have to further cut back on lending and raise cash quickly to meet new standards, Schlesinger said.
The new regulations have added to confidence in Europe's banks, which have been slower than their U.S. counterparts to bolster reserves. European markets rose sharply Monday.
Investors entered trading in the U.S. Monday already heartened by the latest signs of growth out of China. The country reported industrial production accelerated again in August when many had predicted slower growth. Strong expansion in China is considered vital to a global recovery because if demand remains high there, it will offset sluggish growth in the U.S. where economic expansion is not as strong.
The Dow rose 81.36, or 0.8 percent, to 10,544.13. The S&P 500 index rose 12.35, or 1.1 percent, to 1,121.90, while the Nasdaq composite rose 43.23, or 1.9 percent, to 2,285.71.
More than three stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 3.8 billion shares.
Britain's FTSE 100 rose 1.2 percent, Germany's DAX index gained 0.8 percent, and France's CAC-40 rose 1.1 percent. Japan's Nikkei stock average climbed 0.9 percent.
JPMorgan Chase & Co. and Bank of America Corp. were among the biggest gainers in the financial sector. JPMorgan Chase rose $1.36, or 3.4 percent, to $41.12, while Bank of America rose 40 cents, or 3 percent, to $13.95.
Hewlett-Packard, which has been buying up smaller companies in recent months, will pay $1.5 billion, or $43.50 per share, in cash for ArcSight. ArcSight jumped $8.81, or 25 percent, to $43.91, while Hewlett-Packard rose 8 cents to $38.28.
Hertz agreed to pay $1.43 billion, or $50 per share, for Dollar Thrifty, beating out competitor Avis Budget Group Inc. in a bidding war to acquire the rival rental car company. Dollar Thrifty rose $2.57, or 5.4 percent, to $50.58, while Hertz rose 79 cents, or 7.9 percent, to $10.84.
Andrew Neale, a portfolio manager at Fogel Neale Partners said the acquisition activity is "crucial for investors" because when companies are confident and investing money, it adds to investor confidence.
Oil prices continued to rise as a leak in a pipeline that supplies oil to refineries in the Midwest remains closed. Benchmark crude rose 74 cents to settle at $77.19 a barrel on the New York Mercantile Exchange.
Treasury prices rose modestly, indicating not all investors were confident in the latest signs of growth. The yield on the 10-year Treasury note, which moves opposite its price, dipped to 2.75 percent from 2.79 late Friday. Its yield is often used to help set interest rates on mortgages and other consumer loans.