Stocks rose Monday, helped by news that business software maker Oracle Corp. (ORCL) finally struck a deal to buy rival PeopleSoft Inc. (PSFT) and stronger-than-expected retail sales data for November.

The Dow Jones industrial average (search) rose 97.69 points, or 0.93 percent, at 10,640.91. The Standard & Poor's 500 Index (search) was up 10.77 points, or 0.91 percent, at 1,198.77. The technology-laced Nasdaq Composite Index (search) was up 19.87 points, or 0.93 percent, at 2,147.94.

Oracle Corp. announced that PeopleSoft Inc. would accept a $26.50-per-share bid, valuing the rival software company at $10.3 billion. The agreement ends an 18-month feud between the two that featured courtroom intrigue and pithy public statements, and cheered investors who feared the battle would distract the companies from their core businesses.

Oracle's shares shot up 9 percent to $14.45, while PeopleSoft leapt 10.3 percent to $26.42 on Nasdaq.

"It's not merger mania yet, but we've got Oracle and PeopleSoft, Sprint and Nextel and we've got Honeywell buying Novar," John Forelli, portfolio manager with Independence Investments LLC, said.

"There's been speculation that 2005 is going to be a big M&A year as companies try to grow and margins get depressed. Today reminds people that corporate America has plenty of money and they are willing to spend it," he said.

Wall Street also cheered the Commerce Department's (search) report on November retail sales, which rose 0.1 percent, better than the flat sales economists had expected. Taking auto sales out of the equation, retail sales rose 0.5 percent for the month. Wall Street had expected a 0.3 percent rise excluding autos.

"I think the retail sales numbers helped, alleviating a lot of the concern over holiday sales prospects. And then on top of that you have all this merger activity," said Bryan Piskorowski, market strategist for Wachovia Securities. "Mid-month is typically pretty quiet, but this news is bringing some people back into the market."

A small rise in oil futures did little to rattle investors, who remain pleased that prices remain near their five-month lows. A barrel of light crude was quoted at $41.01, up 30 cents, on the New York Mercantile Exchange (search).

Between oil prices and the retail sales figures, investors were becoming more enthusiastic about the economy, analysts said, and were hopeful that the Federal Reserve (search) meeting Tuesday, would confirm that view in its policy statement.

The Fed is widely expected to lift its overnight lending rate a quarter point to 2.25 percent. Comments on the health of the economy from the rate-setting body will also be scrutinized by Wall Street.

In addition to completing the PeopleSoft deal, Oracle posted strong quarterly earnings, beating Wall Street profit forecasts by 3 cents per share. The software maker also issued a better-than-expected outlook for the current quarter. Oracle gained $1.35, or 10.2 percent, to $14.63, while PeopleSoft surged $2.47, or 10.4 percent, to $26.42.

In other merger news, Sprint Corp. (FON) and Nextel Communications Inc. (NXTL) reportedly are drawing closer to a $36 billion merger pact. However, Verizon Communications Inc.'s wireless division is also reportedly preparing a counter-bid for Nextel. Sprint added 30 cents to $24.44, Nextel climbed 23 cents to $29.99, and Verizon was up 48 cents at $41.28.

"News about Sprint and Nextel and the success of Oracle and PeopleSoft is creating a bullishness in the marketplace over the perception that mergers and acquisition activity is going to continue to increase," said Gary Wedbush, head of trading at Wedbush Morgan. "There was a lot of bearish chatter about retail sales and the numbers were surprisingly positive and that is also helping the market."

But Wedbush added that the market was trimming some of its earlier gains and that if oil prices stayed higher, the markets could edge down.

Dow component Honeywell Inc. (HON) gained $1.14 to $36.45 even after the aerospace and defense manufacturer lowered its profit forecasts for 2005, though the company reiterated strong earnings for the current quarter and 2004. Honeywell also announced plans to purchase British industrial holding company Novar PLC for $1.7 billion.

Boeing Co. (BA) rose 25 cents $52.67 despite scrubbing the second straight launch of its new Delta 4 high-payload rocket. The company had planned to launch the rocket Saturday, then Sunday, but pushed it back both times due to a temperature control problem. The launch was supposed to be a demonstration for the U.S. Air Force.

Electronic Arts Inc. (ERTS), THQ Inc. (THQ) and Take-Two Interactive Software Inc. (TTWO) jumped after JP Morgan raised its rating on the video games publishers to "overweight" from "neutral."

Electronic Arts was up 6.2 percent to $57.57, Take-Two rose 5 percent to $35.42 and THQ climbed 3.3 percent to $23.48 on Nasdaq.

Trading was moderate, with 1.4 billion shares changing hands on the New York Stock Exchange, even with the 1.4 billion daily average for last year. About 2 billion shares were traded on Nasdaq, above the 1.69 billion daily average last year.

On the New York Stock Exchange, the number of stocks rising outpaced those on the decline by about 2-to-1. On Nasdaq, advancing issues by about 5-to-3.

The Russell 2000 index of smaller companies was up 5.79, or 0.92 percent, at 638.03.

Overseas, Japan's Nikkei stock average rose 0.3 percent. In Europe, Britain's FTSE 100 closed up 0.91 percent, France's CAC-40 climbed 1 percent for the session, and Germany's DAX index gained 1.07 percent.

Reuters and the Associated Press contributed to this report.