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A $14 billion flurry of mergers and acquisitions awakened the bulls on Monday as the Dow enjoyed its best day in more than a month and recaptured nearly all of last week's losses. 

Today's Markets

The Dow Jones Industrial Average gained 124.17 points, or 1.28%, to 9789.36, the S&P 500 rose 18.60 points, or 1.78%, to 1062.98 and the Nasdaq Composite climbed 39.82 points, or 1.90%, to 2130.74. The consumer-friendly FOX 50 added 11.43 points, or 1.49%, to 776.53.

Without any major economic reports on the agenda, the markets clearly took their cues from the merger news, which renewed the bulls' confidence after last week ended in a three-day slump. Xerox (XRX) inked a $6.4 billion deal to buy Affiliated Computer Services (ACS), Abbott Labs (ABT) bought a drug business for $6.6 billion and Johnson & Johnson (JNJ) acquired a $444 million stake in biotech company Crucell (CRXL). 

“There’s certainly some bullish indications with the increased M&A activity,” NYSE trader Jack Lind of Advanced Equities Services told FOX Business.

Monday's rally represented the strongest performance for the Dow and S&P 500 since Aug. 21 and the Nasdaq Composite's largest rally since July 23. Ending its longest slump since early September, the Dow was led higher by American Express (AXP), Bank of America (BAC) and Cisco (CSCO), which was upgraded by Barclays. Just three blue-chip stocks ended in the red: IBM (IBM), Kraft (KFT) and Wal-Mart (WMT). 

After a resilient month, the markets ran into resistance last week amid disappointing economic reports that led some to question the bulls' economic optimism. In fact, last week marked Wall Street's steepest pullback since early July as the Dow lost 155 points and the S&P 500 slid 2.24%. 

“There is a little piece of me inside that’s still very bearish. But the primary trend -- and you can’t ignore it -- is solely to the upside,” NYSE trader Joseph Greco of Meridian Equity Partners told FOX Business.

Monday's gains pushed the Dow up nearly 50% from its 12-year closing low of 6547.05, which was hit on March 9. Since that time, the benchmark index has surged more than 3,000 points as the financial crisis eased and the Great Recession appears to have ended. 

It is worth noting, however, that volume was light on Monday as some traders observed Yom Kippur. At the close, NSYE floor volume was just under 980 million shares, compared to Friday's volume of 1.2 billion. 

At the forefront of the merger news is Xerox's $6.4 billion cash-and-stock deal to acquire Affiliated Computer Services, a move that will triple Xerox’s services revenue. The deal, which Xerox CEO Ursula Burns called “a game-change,” values shares of Premium at a 33.6% premium over its Friday closing price. 

The increased M&A activity has some traders thinking, “Well maybe there is indeed some value here and the growth prospects are a little bit better,” said Nick Kalivas, vice president of financial research at MF Global. “I think people have taken the secondary issuance as a sign that stocks have poor valuation. I think these M&A deals neutralizes that argument." 

Meanwhile, the Nasdaq Composite climbed almost 2% as tech stocks like Garmin (GRMN) and Qualcomm (QCOM) rallied around an analyst upgrade for tech bellwether Cisco. According to Dow Jones Newswires, Barclays Capital lifted Cisco from “equalweight” to “overweight” and boosted its price target from $24 to $28. 

The commodity markets followed equities into the green. Crude gained 82 cents a barrel, or 1.24%, to $66.84. Gold rose $2.30 an ounce, or 0.23%, to $992.50.

Corporate Movers

Abbott Labs (ABT) unveiled a $6.6 billion deal to buy the drug business of Belgian-based Solvay (SVYSY), marking the third acquisition this month alone for Abbott. The deal, which is expected to close during the first quarter of 2010, will give Abbott control of Solvay’s cholesterol treatments and access to emerging markets. Abbott, which will finance the acquisition with cash, said the deal will add 10 cents to its EPS in 2010 and 20 cents by 2012.

Johnson & Johnson (JNJ) inked a $444 million deal to acquire an 18% stake in Dutch biotech company Crucell (CRXL) in a move that will give the U.S. health-care giant greater access to Europe. The deal is part of a flu vaccine development collaboration, which will focus on making a universal monoclonal antibody product to fight all influenza strains, including H1N1 and H5N1 or bird flu.

Time Warner (TWX) could soon be Timeless. The media conglomerate’s largest shareholder said last week that Time Warner will eventually sell its Time Inc magazine unit, according to Reuters. "Time Warner just spun off their cable division, they are going to sell their print division, they are going to spin off AOL and they're just going to be Warner Brothers, HBO and the Turner Networks," said Gordon Crawford, managing director of Time Warner’s largest shareholder, Reuters reported.

Global Markets

Asian stocks put some pressure on Wall Street earlier as the Shanghai Composite tumbled nearly 3% and Japan's Nikkei 225 lost 2.5% to 10009.52 and Hong Kong's Hang Seng dropped 2.07% to 20588.41. After some early apprehension, European markets closed sharply higher. London's FTSE 100 jumped 1.64% to 5165.70, France's CAC 40 soared 2.3% to 3825 and Germany's DAX gained 2.78% to 5736.31.