Stocks rose Monday, boosted by successful elections in Iraq and a flurry of merger activity led by SBC and AT&T's $16 billion union, but the good news was not enough to prevent a lower finish for the month of January.

The Dow Jones industrial average (search) closed up 62.74, or 0.6 percent, to 10,489.94. Broader stock indicators rose substantially. The Standard & Poor's 500 index (search) was up 9.90, or 0.8 percent, at 1,181.26, and the Nasdaq composite index (search) gained 26.58, or 1.3 percent, to 2,062.41.

"We finally have a market reacting to good news," said John Caldwell, chief investment strategist at McDonald Financial Group. "We've got good earnings reports, some big merger news -- which always seems to warm up Wall Street traders -- and we've put the Iraqi elections behind us. Hopefully, investors can now focus on what are still solid underlying fundamentals in the market."

However, despite Monday's gains, all three indexes ended January lower -- which could point to a weak year if historical trends continue. According to the Stock Trader's Almanac (search), in the last 13 years following a presidential election, the market's direction for the full year followed January's direction -- with the exception of 2001.

For the month, the Dow ended down 2.7 percent, the Nasdaq declined 5.2 percent and the S&P 500 slipped 2.5 percent.

SBC Communications Inc. (SBC) confirmed Monday morning that it will buy its former parent, AT&T Corp. (T), for $16 billion, in a deal that could prompt other telecommunications titans to seek out their own combinations, the Journal said. SBC will pay about $15 billion in stock and an additional $1 billion in the form of a special dividend to buy Ma Bell.

Dow component SBC rose 14 cents, or 0.6 percent, to $23.76 while AT&T shares fell nearly 3 percent, or 52 cents, to $19.19 as SBC's offer price came below the company's recent trading price.

Meanwhile, Metlife Inc. (MET) said it would purchase Citigroup Inc.'s (C) Travelers Life & Annuity division for $11.5 billion. With the acquisition of Travelers, Metlife is poised to become the largest individual life insurer in North America, while giving Citigroup a stake in Metlife and a large infusion of cash. Metlife fell 19 cents to $39.75, while Citigroup added 67 cents to $49.05.

Meanwhile Time Warner Inc. (TWX) and Comcast Corp. (CMCSA) have joined forces to make a $15 billion bid for bankrupt Adelphia Communications Corp., according to media reports. The offer is short of the $17.5 billion Adelphia reportedly had sought. Time Warner edged 7 cents higher to $18, while Comcast lost 20 cents to $31.61.

Earnings news from companies such as Exxon Mobil Corp. (XOM) also boosted investor confidence. Exxon, the world's largest publicly traded oil company and a Dow component, rose 33 cents, or 0.6 percent, to $51.60, after reporting the biggest quarterly profit ever for a U.S. company, with earnings driven by high crude oil and natural gas prices.

Eastman Kodak (EK) joined the merger wave with a $980 million cash bid for Canadian printer software manufacturer Creo Inc. as part of its move into digital imaging and away from traditional film manufacturing. Kodak added 39 cents to $33.09, while Creo surged $1.82, or 12.67 percent, to $16.18.

The deals follow a $56 billion bid for Gillette Co. (G) by Procter & Gamble Co. (PG) Friday.

The unexpectedly successful vote in Iraq on Sunday eased fears of disruption of oil exports, which helped to push crude prices lower.

"There's a relief rebound in response to the successful Iraqi elections," said Paul Cherney, chief market analyst at Standard & Poor's. "When oil prices are lower, it reduces the cost of doing businesses, which helps stocks."

The success of the Iraqi elections despite attacks on 38 of the nation's polling centers, along with OPEC's decision to maintain current oil production levels, removed a pair of obstacles that had prevented many investors from getting into the market. The news out of the Middle East failed to halt rising oil prices, however, with a barrel of light crude settling at $48.20, up $1.02, on the New York Mercantile Exchange (search).

Shares of Marsh & McLennan (MMC) rose 4.5 percent, or $1.41, to $32.50 after the company said it will pay $850 million in a settlement with the New York Attorney General's office.

On the economic front, U.S. consumer spending advanced solidly in December as personal income shot up a record 3.7 percent on a big dividend payout by software giant Microsoft Corp., a government report showed on Monday.

Shares of home builders took a hit after a report said sales of new U.S. homes rose a smaller-than-expected 0.1 percent in December. KB Home fell 1.2 percent to $106.39 and Pulte Homes Inc. slipped 1 percent to $64.36.

The Chicago Purchasing Management Index (search) rose unexpectedly in January to 62.4, showing that business activity in the U.S. Midwest expanded in January for the 21st straight month and at a faster rate than expected.

Overall, trading was active, with 1.68 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.83 billion shares were traded on Nasdaq, just above the 1.81 billion daily average last year. Advancers outnumbered decliners on the New York Stock Exchange by 13 to 4 and by 11 to 4 on Nasdaq.

The Russell 2000 index of smaller companies was up 11.02, or 1.8 percent, at 624.02.

Overseas, Japan's Nikkei stock average rose 0.59 percent. In Europe, Britain's FTSE 100 closed up 0.4 percent, France's CAC-40 gained 1.12 percent for the session, and Germany's DAX index climbed 1.26 percent.

Reuters and the Associated Press contributed to this report.