Stocks rose Monday, led by technology shares, as a series of merger and acquisition deals and falling oil prices lured investors back to equities. The Nasdaq closed at its highest level in six months.

The Dow Jones industrial average (search) rose 70.58 points, or 0.68 percent, to end at 10,519.72. The Standard & Poor's 500 Index (search) gained 7.58 points, or 0.63 percent, to finish at 1,219.44. The Nasdaq Composite Index (search) climbed 22.55 points, or 1.07 percent, to close at 2,135.43.

"I think there's a bit of relief as we've seen oil prices back off to lower levels," said Owen Fitzpatrick, head of U.S. equity group at Deutsche Bank Private Wealth Management.

"There's a little looking forward to a decent earnings period," Fitzpatrick added. "Alcoa on Friday had numbers that I think alleviated some concerns in that name in particular, and as we get into this earnings season, we'll see more of rally.

U.S. crude oil futures ended sharply lower, as storm worries eased after Hurricane Dennis made landfall without causing major disruption to production facilities in the Gulf of Mexico.

High oil prices usually hurt consumer spending and corporate profits, so a slip in prices is generally positive for the market. NYMEX August crude futures fell 71 cents, or 1.2 percent, to settle at $58.92 a barrel on New York Mercantile Exchange (search).

An uptick in deal activity helped the market. Deals typically lift equities as they are viewed as a sign of confidence in the economy and raise hopes of a pickup in other acquisition activity.

Agilent Technologies Inc. (A) boosted the S&P 500 Index, rising 5.5 percent, or $1.33 to $25.67 after the Wall Street Journal reported that Kohlberg Kravis Roberts & Co. and Silver Lake Partners have emerged as the leading bidder for Agilent's semiconductor products business.

Optimism ahead of earnings was helping shares, said Roger Levine, managing director, at Pacific Crest Securities, which concentrates on the technology sector.

"We really don't expect any major misses," Levine said. "Everyone seems pretty comfortable with the numbers that have been reported and pre-reported. It's really just gearing up in front of earnings and, as usual, it's the tech sector leading the market."

Stocks stayed within the narrow trading range of the last year-and-a-half. "The market is just kind of waiting," said Bob Baur, managing director and head of global trading at Principal Global Investors. "They're waiting for the Fed to stop raising rates, they're waiting for earnings to slow, they're waiting for oil to stop rising."

Monday's deals included a report that Goldman Sachs Group Inc. (GS) and German financial firm Allianz are in talks to buy a $1 billion-plus stake in one of China's largest state-owned commercial banks. Goldman Sachs rose $1.66 to $107.31. Allianz rose 21 cents to $11.99.

Dutch media company VNU NV said it will acquire U.S.-based health care data provider IMS Health Inc. (RX ) in a stock and cash deal for about $7 billion. VNU rose 9 cents to $12.11, while IMS rose 56 cents to $26.45.

Procter & Gamble Co. (PG) shares rose 94 cents to $53.90, lifted by a brokerage note from Prudential Equity Group predicting its stock price will rise once it completes its acquisition of razor blade maker Gillette Co. DuPont Co. shares rose 65 cents to $44.15 after Deutsche Bank upgraded its stock.

Oil company Pogo Producing Co. (PPP) said it has agreed to acquire Northrock Resources Ltd., a unit of Unocal Corp. (UCL) in a $1.8 billion cash deal. Pogo's shares slid 1.4 percent to $54.01, while shares of Unocal inched up 0.3 percent to $65.93, both on the New York Stock Exchange.

Procter & Gamble Co. (FON) shares rose 94 cents to $53.90, lifted by a brokerage note from Prudential Equity Group predicting its stock price will rise once it completes its acquisition of razor blade maker Gillette Co. DuPont Co. shares rose 65 cents to $44.15 after Deutsche Bank upgraded its stock.

Shares in Merck & Co. (MRK) rose 24 cents to $31.24 as jury selection began in Texas for the first trial alleging the drug maker knew of the dangers posed by its popular painkiller
Vioxxlong before it voluntarily pulled the drug from the market last year. "We intend to defend these cases individually over many years," Merck's general counsel, Kenneth C. Frazier, said in a statement. The company's most recent lawsuit count reached 3,857.

DreamWorks Animation SKG Inc.(DWA), creator of animated hits "Shrek" and "Shark Tale," warned of a loss in the second quarter, cut its full-year forecast and said the
Securities and Exchange Commissionis investigating its stock trading and the release of its first-quarter results. Its stock dropped $3.54 to $23.27.

Morgan Stanley (MWD) rose 45 cents to $53.57 after it announced Co-President Stephen S. Crawford resigned from the financial services firm, while Co-President Zoe Cruz was appointed acting president.

Bonds rose slightly, with the yield on the 10-year Treasury note at 4.10 percent, compared to 4.11 percent late Friday. The U.S. dollar was down against other major currencies. Gold prices were higher.

Overall, trading was moderate, with 1.41 billion shares changing hands on the New York Stock Exchange, just below the 1.46 billion daily average for last year. About 1.77 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 7 to 3 on Nasdaq.

The Russell 2000 index of smaller companies rose 9.60, or 1.4 percent, to 671.74.

Overseas, Japanese stocks rose to a 13-week high Monday as major exporters like Honda Motor Co. benefited from Wall Street's gains Friday. Japan's Nikkei stock average rose 108.80 points, or 0.94 percent. Britain's FTSE 100 was up 0.19 percent, Germany's DAX index was up 1.42 percent, and France's CAC-40 was up 0.49 percent.

Reuters and the Associated Press contributed to this report.