Alcoa, Merrill Deals Bring Holiday Cheer To U.S. Stocks

SAN FRANCISCO (MarketWatch) - U.S. stocks rose in a shortened Christmas Eve trading session Monday, with a flurry of deals contributing support including Alcoa Inc.'s sale of its packaging and consumer businesses and a $2.6 billion private placement for Merrill Lynch & Co. from Singapore's sovereign fund.

The Dow Jones Industrial Average climbed as much as 93 points, or 0.7%, to 13,5430, aided by a 1.6% climb in shares of aluminum giant Alcoa. The company late Friday agreed to sell its packaging and consumer businesses to New Zealand-based Rank Group Ltd. for $2.7 billion. The deal is expected to close by the end of the first quarter.

"Merger and acquisition activity in terms of Alcoa is positive but there are a lot of year-end dynamics at work that are driving this market," said Paul Mendelsohn, chief investment strategist at Windham Financial Services.

Merrill Lynch & Co. shares advanced 4.1% to $57.83 after the investment banking firm said it will raise up to $6.2 billion in a private placement of common stock with Temasek Holdings Pte. Ltd. from Singapore, and Davis Selected Advisors.

Other financial stocks were higher after Bank of America said Friday that it and other consortium members Citigroup and J.P. Morgan Chase have dropped plans for a "superfund" -- partly because of a lack of interest from the funds it was intended to save. Citigroup led price performers to rise 2.5% to $30.98.

The broader S&P 500 Index rose 9 points to 1,493.39 and the tech-heavy Nasdaq Composite rose 14 points, or 0.5%, at 2,705.52.

Stocks extended their gains from Friday's rally after upbeat results from Research In Motion Ltd. bolstered the technology sector and financials drew strength on word

"That momentum [from Friday] may keep us going until we get some important economic data coming out toward the end of the week," said Mendelsohn.

On Monday, exchanges will close early ahead of the Christmas holiday, with the New York Stock Exchange, the Nasdaq, and the American Stock Exchange all due to close at 1 p.m. Eastern time.

In currency action, with the dollar ticked higher against the yen at 114.29 yen. Meanwhile, the euro was trading at $1.4396, up from $1.4356 late Friday.

Crude futures for February delivery were last seen down 46 cents, or 0.5%, at $92.85 a barrel on the New York Mercantile Exchange. It rose to an intraday high of $93.84 in electronic trading early on speculation demand for heating oil may increase during the winter.

At the same time, shares of ArcelorMittal , the world's No. 1 steelmaker, were up 1.5% at $74.32 after the company announced two acquisitions with undisclosed terms, including Eisen Wagner in Austria and Uruguay's Cinter SA, which is at least its third deal in South America this month.

But shares of FedEx Corp. dropped 1.6% to $92.70. Late Friday, the company said the Internal Revenue Service ordered the payment of back taxes and fines totaling $319 million for employees the firm misclassified as independent contractors.

By Carla Mozee