U.S. stocks rose Monday as a string of corporate takeovers and lower oil prices boosted optimism about the outlook for profits.

The Dow Jones industrial average rose 89.72 points, or 0.74 percent, to 12,283.85. The Standard & Poor's 500 Index gained 12.41 points, or 0.89 percent, to 1,409.12. The Nasdaq Composite Index added 35.18 points, or 1.46 percent, to 2,448.39.

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The S&P 500 soared to a six-year high during the session, while the Nasdaq recorded its biggest one-day percentage gain in nearly a month, snapping a two-session losing streak.

The drop in oil prices spurred demand for industrial stocks such as diversified manufacturers United Technologies Corp. (UTX), Honeywell International Inc. (HON) and 3M (MMM) Co.

But shares of Pfizer Inc. (PFE) fell more than 10 percent, wiping out more than $30 billion of the drugmaker's market value after it abandoned development of an experimental cholesterol drug.

Monday's deal news cut across the financial, casino, food and real estate sectors. A break in the dollar's recent decline also raised the allure of U.S. stocks, with investors betting on a strong Wall Street year-end finish.

"Today, certainly oil and very positive merger activity is bringing more people in," said John Lynch, chief market analyst at Evergreen Investment Management Co., in Charlotte, North Carolina.

S&P HITS ANOTHER HIGH

In Monday's deal news, Bank of New York Co. Inc. (BK) said it plans to buy Mellon Financial Corp. (MEL) for about $16.5 billion to create the world's largest securities servicing and asset management firm.

LSI Logic Corp. (LSI), a maker of storage and DVD chips, said it would buy semiconductor and software storage company Agere Systems Inc. (AGR), sparking a rally in chip stocks.

The semiconductor index rose 2 percent, its biggest percentage gain in almost three weeks, with chip sector related stocks such as Cisco Systems Inc. (CSCO) rising.

Cisco shares gained 2.1 percent to end at $27.25 on the Nasdaq, while Agere shares rose 8.5 percent to $19.30. LSI Logic shares, however, dropped 13.6 percent to $9.12 on concerns its deal may prove costly.

IBM BOOSTS DOW, PFIZER SLIDES

Shares of International Business Machines Corp. (IBM) rose 2.5 percent to $93.51 on the NYSE after Barron's newspaper said the company was evolving into a higher-growth software company under Chief Executive Sam Palmisano and its stock price had yet to reflect recent progress.

IBM was the biggest gainer on the Dow and was the second-biggest advancer on the S&P 500.

Pfizer, the most heavily traded stock on the New York Stock Exchange, ended at $24.90, down $2.96. Its traded volume was the stock's biggest in more than a year, with more than 283 million shares traded.

Bank of New York shares jumped 12 percent to end at $39.75 on the NYSE, while Mellon shares ended up 6.8 percent at $42.78. The Philadelphia Keefe Bruyette & Woods index of bank stocks was up 1.7 percent, its biggest one-day percentage gain in more than four months.

UTX shares gained 1.6 percent to $64.90, Honeywell gained 1.9 percent to $43.61 and 3M shares rose 1.1 percent to $80.89.

NYMEX crude for January delivery ended down $1.08 a barrel at $62.35 amid forecasts of warmer weather in the United States and doubts among traders of another OPEC production cut. The U.S. heating oil market is the world's largest.

The dollar edged up against most major currencies as investors took profits following a dollar decline that has shaved some 3 percent off its value in less than two weeks.

Volume was moderate on the NYSE, where about 1.40 billion shares changed hands, below last year's daily average of 1.61 billion. On Nasdaq, about 2.04 billion shares traded, above last year's daily average of 1.80 billion.

Advancers outnumbered decliners on the NYSE by a ratio of about 8 to 3, while on Nasdaq, more than nine stocks rose for every two that fell.

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