Stocks gain for third session. Microsoft falls.
Dow rises 75 points as stocks put together a three-day rally. But Microsoft falls after it announces purchase of Internet calling company Skype.
Skype Chief Executive Officer Tony Bates (left) speaks as Microsoft CEO Steve Ballmer listens at their joint news conference in San Francisco, May 10, 2011. Microsoft and Skype announced that they have entered a definitive agreement under which Microsoft will acquire Skype for $8.5 billion from the investor group led by Silver Lake. Stocks rose generally, but Microsoft's stock fell.
Susana Bates/Reuters
By Abby Schultz and JeeYeon Park, CNBC.com
Stocks rallied for a third consecutive session amid Microsoft's $8.5 billion acquisition of Skype, strength in China's economy, and rising commodity prices.
The Dow Jones Industrial Average rose 75.68 points, or 0.6 percent, to close at 12,760.36, marking three straight days of gains for the blue-chip average.
Microsoft fell after the tech giant said it would buy Skype for $8.5 billion, including debt. Ebay, which owns a 30 percent stake in Skype, gained following the news.
The S&P 500 rose 10.87 points, or 0.8 percent, to close at 1,357.16, while the Nasdaq rose 28.64 points, or 1.01 percent, to close at 2,871.89, for three straight days of gains for both indexes.
All key S&P 500 sectors were higher throughout most of the session, led by utilities and consumer discretionary.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 17.
"This is the kind of market where the lack of bad news is taken as good news," said Uri Landesman, President of Platinum Partners.
"The overall unemployment rate is still a problem, the housing market is a still a problem, and the Middle East is a huge problem, and the market keeps going up," Landesman said.
He expects stocks will continue to climb until the S&P 500 hits somewhere between 1,400 and 1,420, "then I think you'll see a major correction."
But others see stocks falling before they head higher. Market technicals show there could be a few weeks of weak price movement before stocks move higher again, Mark Arbeter, chief technical strategist at Standard & Poor's, said on CNBC.
“The short-term charts are suggesting that we may go down and retest the 1,329 level on the S&P—and possibly 1,323—before resuming the uptrend,” Arbeter said, adding the S&P 500 could reach 1,440.
In earnings news, Dean Foods soared after the dairy producer delivered better-than-expected earnings, helped by sales of its Horizon Organic milk. The firm also boosted its 2011 outlook.
Wendy's/Arbys Group also gained after the fast-food chain said it was making progress in its efforts to sell Arby's, and would raise prices to offset rising food costs.
However, Activision Blizzard gained after reporting a 32 percent surge in net income and despite expressing concerns about the effects of Sony's recent PlayStation Network's troubles.
Dow component Disney led the blue-chip higher ahead of its earnings release after the market closes, while Cisco gained ahead of its earnings release on Wednesday.
Oil prices turned slightly higher on Monday despite news the CME Group raised margins for crude futures by 25 percent, as traders focused on supply constraints.
U.S. light, sweet crude rose 1.3 percent to close at $103.88 a barrel, while in London, Brent crude rose 1.5 percent to close at $117.63.
Precious metals also advanced as silver futures rose 3.7 percent to settle at $38.48 an ounce, while gold futures rose almost 1 percent to settle at $1,516.60.
