NEW YORK (AP) - Blue chips stocks jumped Monday as news of a potential big telecom deal involving Verizon gave a boost to the Dow and put the index closer to 14,000. Broadly, stocks traded largely flat as investors digested the market's huge gains of last week.
While broader market indexes showed more modest gains than the Dow, the notion of a Verizon deal appeared to inject Wall Street with fresh optimism and helped stocks hold onto last week's sizable gains because buyout activity has been a big driver for the stock market in the past year.
While Vodafone Group PLC denied a report by the Financial Times that it is weighing whether to make a huge $160 billion bid for Verizon Communications Inc., investors appeared undeterred. The newspaper's report cautioned that Vodafone has yet to approach Verizon; a deal could give Vodafone full ownership of Verizon Wireless, which Vodafone and Verizon now own jointly.
'I think just the idea of the number floated -- $160 billion -- gets the juices running in the market again even after this big move,' said Greg Church, chief investment officer of Church Capital Management in Yardley, Pa., referring to last week's gains. 'It would be the biggest deal ever. People want to be at the party and they don't miss it.'
In midday trading, the Dow Jones industrial average rose 67.55, or 0.49 percent, to 13,974.80. The Dow again set a trading high Monday, hitting 13,982.12. The previous high of 13,932.29 came in Friday's session, which also saw the Dow's 51st record close since the start of October. The gains Monday put the blue chip index closer to the psychological barrier of 14,000.
Also helping the Dow, construction equipment maker Caterpillar Inc. hit a new high of $86.49.
Broader stock indicators showed more modest gains. The Standard & Poor's 500 index rose 1.98, or 0.13 percent, to 1,554.48. The S&P set a fresh trading high of 1,555.63, topping a high of 1,555.10 set Friday when the index surged past a trading high set in March 2000. The Nasdaq composite index rose 2.88, or 0.11 percent, to 2,709.88.
Declining issues outnumbered advancers by about 8 to 7 on the New York Stock Exchange, where volume came to 377.1 million shares.
Bonds rose Monday, with the yield on the benchmark 10-year Treasury note slipping to 5.09 percent from 5.10 percent late Friday.
On Monday, light, sweet crude futures rose 46 cents to $74.40 on the New York Mercantile Exchange. Oil topped $74 briefly last week but hasn't closed above that level since mid-September.
The dollar was mixed against other major currencies and continued to hover near its record lows against the euro. Gold prices fell.
Buyout news was responsible for moving a number of stocks Monday. Verizon rose $1, or 2.4 percent, to $42.76. Vodafone fell 20 cents to $33.32.
In a much more modest but confirmed deal, restaurant chain operator IHOP Corp. said it would acquire Applebee's International Inc. for about $1.9 billion. Applebee's rose 47 cents to $24.85, while IHOP jumped $4.65, or 8.3 percent, to $60.90.
Stocks showed little reaction to the New York Federal Reserve's Empire State Manufacturing Survey that found regional manufacturing activity continued to improve in July.
Last week's run-up came ahead of a flurry of quarterly results -- 11 of the 30 companies that make up the Dow Jones industrials are due to report this week -- and in advance of key readings on inflation.
Forecasts from companies should help indicate whether they can continue to put up solid profit growth as pricing pressures fluctuate, in part because of forces such as rising oil prices.
In other corporate news, McDonald's Corp. rose 1 cent to $51.92 after predicting its second-quarter earnings before charges will top Wall Street's forecasts.
Mattel Inc. rose 83 cents, or 3.1 percent, to $27.35 after reporting its second-quarter earnings rose 15 percent as increased sales global of its Barbie dolls and Hot Wheels toy cars made up for soft U.S. sales.
Ford Motor Co. rose 5 cents to $9.02 after denying various reports that it is in talks to sell its Volvo division.
Royal Philips Electronics NV, the maker of medical and lighting equipment, fell 46 cents to $44.09 after reporting its second-quarter net profit rose following the sale of its stake in a Taiwanese semiconductor company. The company also said, however, that currency exchange rates hurt sales.
In afternoon trading, Britain's FTSE 100 fell 0.26 percent, Germany's DAX index rose 0.14 percent, and France's CAC-40 gained 0.12 percent.
In Asia, Japan's Nikkei stock average finished flat. Hong Kong's Hang Seng Index fell 0.63 percent, while the often-volatile Shanghai Composite Index fell 2.36 percent.
The Russell 2000 index of smaller companies fell 0.68, or 0.08 percent, to 855.09.
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