The Dow Jones industrial average rose nearly 215 points to a record 9,374, vaulting past the record close of 9,337.97 set on July 17.
The Standard & Poor's 500 also jumped to its first record high since July, but small-company shares continued to lag the blue-chip rally, preventing record highs by other popular broad-market indexes.
The return to record terrain caps a fourth-month odyssey that saw the Dow fall as low as 7,400 on Sept. 1 and then 7,467 on Oct. 8, the day the market recovery began.
Before the rebound began, it had seemed that the spread of financial turmoil around the world would send Wall Street to its first losing year since 1990. Now, several major indexes are poised to extend an unprecedented streak of three straight years with gains of 20 percent or more.
The Standard & Poor's 500 is up 22.4 percent for the year, the Nasdaq composite is up 25.9 percent, and the Dow isn't very far behind at 18.5 percent.
"I think the market moves higher over the next several months, barring some unforeseen shoe that could always drop from somewhere," said Richard Minshall, founder and chairman of Capital Advisors Inc.
Minshall, who manages over $700 million in investments, cites worldwide declining interest rates, lower tax rates in Japan, earnings that are coming in at or above forecasts, and a recession-free 1999 U.S. economy as reasons for his upbeat posture.
"All these things are great ingredients for a continued move in this bull market."
The day's merger news swept across a broad swath of American industries from Internet technology to natural gas.
Internet shares wowed investors with another fireworks display on word Netscape and America Online might walk down the aisle. Amazon.com, which late Thursday announced a three-for-one stock split, escalated 37 3/8 to 218; eBay 46 to 193; Cyberian Outpost 10 5/8, or 74 percnt, to 25; Yahoo! 30 7/16 to 221 7/16; Inktomi 12 5/8 to 146 3/8; CMG Information Services 8 7/8 to 86 1/4; and Preview Travel 2 1/16 to 17 3/16.
The brokerage group matched Web issues step for step, benefiting from takeover speculation. Lehman Brothers rose 8 13/16 to 54 1/2, Hambrecht & Quist 3 5/8 to 27 3/4, Charles Schwab 6 3/16 to 59 3/16, PaineWebber 4 5/16 to 42 13/16, Bear Stearns 3 11/16 to 42 1/2, and Merrill Lynch 4 3/8 to 76.
Trading volume on the New York Stock Exchange was heavy for a Monday session, and the busiest since Nov. 5, a bullish sign.
But market breadth was clearly lacking, the house-rocking performance by the blue-chip averages notwithstanding.
"There's two markets out there," said Phil Roth, chief technical market analyst at Morgan Stanley Dean Witter. "One is the market for the S&P 500 and glamour and blue-chip stocks, which is best described as a mature bull market.
"Everything else you could describe as being in a mature bear market, or a rally in a bear market, if you looked at the Value Line index, the Russell 2000 index, or the advance-decline line," he said. "We're at a blow-off type move in things like Internet stocks and some of the financials that have attracted deal players. The rest of the market is sort of following along grudgingly.
"Breadth hasn't been bad, but it's in no way kept pace with the major averages."
In Monday's market indicators:
- The Standard & Poor's 500 Index rose 2.1 percent to a record.
- New York Stock Exchange winners outran losers by 3 to 2. One hundred twenty-six stocks reached 52-week highs, the most since the 128 of July 20. Fifty-two week lows totaled 31.
- On the Big Board floor, turnover swelled 3 percent to 731 million shares.
- The Nasdaq Composite advanced 2.6 percent. Advancing issues led decliners by 21 to 19 in the Nasdaq Stock Market, with 113 new highs and 52 new lows. Volume totaled 940 million shares.
- The Russell 2000 Index of small-company stocks gained 1.0 percent.
- In the bond market, the 30-year Treasury declined 22/32, to yield 5.266 percent.
Among the compaies in the news:
- Germany's Deutsche Bank is considering purchasing Bankers Trust (BT) for about $93 a share, or about $9 billion. The companies said the discussions are in the "advanced stages." BT shares leaped 7 to 84 1/4.
- America Online (AOL) huddled with Netscape Communications (NSCP) about a potential hookup. The deal would likely be valued in excess of $4 billion, according to the Wall Street Journal. AOL shares added 4 3/4 to 89 5/8 and Netscape stock climbed 2 9/16 to 41 3/4.
- Conglomerate Tyco International (TYC) is acquiring electrical connector heavyweight AMP (AMP) in an $11.3 billion stock swap, or $55.95 a share. Tyco shares fell 2 13/16 to 62 1/4, while AMP stock moved up 3 to 48 1/8.
- Insurers Unum (UNM) and Provident Cos. (PVT) will combine in stock swap, forming a company with pro forma revenues in excess of $8.4 billion for the 12 months ended Sept. 30. Unum shares rallied 4 1/2 to 52 5/8 and Provident stock rose 4 1/8 to 37 1/2.
- B.F. Goodrich (GR) will buy Coltec Industries (COT), a maker of aerospace and industrial products, for $2.2 billion in stock, or $20.13 a share. Stock of the former tacked on 3 5/16 to 39 1/4 and shares of the latter lifted 1 15/16 to 19 7/8.
- Fleet Financial Group (FLT) tacked on 1/2 to 43 13/16 after disclosing it's buying Sanwa Bank's U.S. unit Sanwa Business Credit. Terms were not disclosed, but published reports last week pegged the deal at about $750 million and assumed debt.
- Union Pacific Resources (UPR) depreciated 5/16 to 12 15/16. Duke Energy (DUK) will buy its natural gas processing unit for $1.35 billion. Duke shares softened 1/2 to 63 1/16.
- Cabletron Systems (CS) rallied 1 11/16, or 12 percent, to 15 1/4 after Merrill Lynch upped its view of the computer networker to near-term "accumulate" from "neutral."
- FactSet Research Systems (FDS) put on 3 3/4 to 41 3/4. Morgan Stanley Dean Witter analyst Howard Penney started coverage of the financial data provider with a "strong buy" opinion.
- Pointing to an attractive valuation, Lehman Brothers analyst George Elling improved his view of Hewlett-Packard (HWP) stock to "buy" from "outperform," sending the shares up 3 13/16 to 61 5/8. Elling issued a price target of $85 a share.