Stocks rose Monday as investors welcomed news of an acquisition that would create the largest refiner of crude oil in North America, along with a big order for airplane manufacturer Boeing and brokerage upgrades on Apple Computer, Ciena Corp. and Starbucks Corp.

The Dow Jones industrial average (search) was up 84.76 points, or 0.83 percent, to finish at 10,242.47. The Standard & Poor's 500 Index (search) was up 9.98 points, or 0.87 percent, to end at 1,162.10. The Nasdaq Composite Index (search) was up 18.59 points, or 0.96 percent, to close at 1,950.78.

All three indexes climbed 1 percent earlier in the session, following last week's volatile trade that included sharp sell-offs and steep rallies. On Wednesday, the Dow was a hairsbreadth from ducking under the 10,000 level, but on Thursday it surged by its largest amount in two years.

"Merger news, and the existing home sales showing the housing market was relatively strong, helped," said Evan Olsen, head of equity trading at Stephens Inc.

"It does feel as though we are at some oversold levels. Earnings have been coming through fairly strong and people are starting to get a little more optimistic."

The news of Valero Energy Corp.'s (VLO) $8 billion takeover of oil refiner Premcor Inc. (PCO) — creating the largest oil refiner in North America — reassured investors that corporate America was still willing to make large deals despite economic uncertainty.

Premcor jumped 18 percent, or $10.70 to $69.70, while Valero rose 1.1 percent, or 83 cents to $75.87. The combined company would unseat Exxon Mobil Corp. (XOM) as the largest refiner in North America.

The deal also consolidates refining capacity, a key concern given the runaway global demand for oil. Crude futures briefly touched $56 per barrel early Monday, but settled at $54.57, down 82 cents, on the New York Mercantile Exchange (search).

ACE Aviation Holdings Inc., the parent company of Air Canada, announced firm orders for 18 Boeing 777 jets and 14 787 Dreamliner jets. Boeing (BA) shares climbed $1.70 to $59.58.

March U.S. existing home sales also helped the market, rising 1 percent to a seasonally adjusted annual rate of 6.89 million units. That figure was in line with economists' expectations for the level of sales to be 6.8 million homes, sparking a 3.21 percent increase in the Dow Jones index of U.S. home builders. Shares of KB Home (KBH) gained 3.4 percent, or $3.76 to $112.96.

"We believe some asset allocation occurred after the existing home sales data -- people were selling bonds and buying stocks," said Tom Schrader, managing director, U.S. equity trading, Legg Mason Wood Walker.

The bond market was little changed after last week's gains, with the yield on the 10-year Treasury note holding steady at 4.25 percent from late Friday. The dollar rose against most major currencies, while gold prices fell.

Analysts noted that volume was relatively low compared to the last few weeks of heavy trading, and said some investors might prefer to sit out of the market until next week, when the Fed's next decision on interest rates is due. Wall Street is hoping the Fed will give a bullish forecast for the economy, which would continue to allow for gradual rate hikes that corporate America can easily digest.

"The real key is interest rates," said Russ Koesterich, senior portfolio manager at Barclays Global Investments in San Francisco. "We need to get back to that Goldilocks economy, where we're growing enough to keep things going but keeping inflation at bay and interest rate hikes measured. We do that, we'll see stocks improve."

Nasdaq drew support from a slew of Wall Street upgrades on companies, including Apple and Ciena Corp. CSFB raised its investment rating on Apple (AAPL) to "outperform" from "neutral," citing expectations for growth in personal computer sales. Apple shares rose 4.2 percent, or $1.48 to $36.98.

Piper Jaffray upgraded Ciena (CIEN) to "outperform" from "market perform," sending its shares up 5.2 percent, or 10 cents to $2.01.

Smith Barney upgraded memory chip maker Micron Technology Inc. (MU) to "hold" from "sell". It rose 17 cents, or 1.8 percent, to $9.58.

Prudential Equity Group hiked its rating on Starbucks (SBUX) to "overweight" from "neutral." The shares advanced 4.2 percent, or $1.89 to $47.45.

Among those upbeat about earnings was Ed Keon, chief investment strategist at Prudential Equity Group, who wrote in a note to clients Monday that he expects first-quarter earnings growth of 15 percent and said "the overall picture continues to be quite strong."

Qwest Communications International Inc. (Q) was unchanged at $3.55 after MCI Inc. (MCIP) said Qwest's $9.75 billion takeover bid was superior to that of Verizon Communications Inc(VZ), which is now expected to improve its $7.8 billion offer for MCI. Verizon held steady at $34.06, while MCI was down 2 cents at $26.67.

Shares of General Electric Co. (GE) ticked up 25 cents to $36.35 after the Wall Street Journal reported it is in talks to sell its self-storage business for about $2.5 billion to a unit of Prudential Financial Co. and Extra Space Storage Inc.

Online advertiser DoubleClick Inc. (DCLK) slid 45 cents to $8.12 after it announced it would be acquired by a private equity firm for $1.1 billion. The deal had been rumored for days, which sent DoubleClick's stock higher than the final offer of $8.50 per share.

SBC Communications Inc. (SBC), preparing to merge with AT&T Corp., said its profits fell 53.4 percent from a year ago due to costs associated with the purchase of AT&T Wireless by Cingular. However, SBC surpassed Wall Street's earnings forecasts by a penny per share, and its stock added 12 cents to $23.32.

Overall, trading was active, with 1.43 billion shares changing hands on the New York Stock Exchange, about the same as the 1.46 billion daily average for last year. About 1.49 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year.

Advancers outnumbered decliners on the New York Stock Exchange by about 12 to 5 and by about 3 to 2 on Nasdaq.

The Russell 2000 index of smaller companies was up 6.91, or 1.17 percent, at 596.44.

Overseas, Japan's Nikkei stock average rose 0.25 percent. In Europe, Britain's FTSE 100 closed up 0.32 percent, France's CAC-40 climbed 0.32 percent for the session, and Germany's DAX index gained 0.57 percent.

Reuters and the Associated Press contributed to this report.