The bulls were back at the helm on Wall Street on Monday, provoking a triple-digit surge on the Dow thanks to tumbling crude oil prices, strength from retailers like Ann Taylor and some serious M&A talk. 

Today's Market

The Dow Jones Industrial Average rose 130.43 points, or 1.02% to 12876.31, the Standard & Poor’s 500 index gained 15.30 points, or 1.10%, to 1403.58 and the Nasdaq Composite Index picked up 42.97 points, or 1.76%, to 2488.49. The consumer-friendly Fox 50 rose 10.61 points, or 1.08%, to 994.14.

Monday's rally allowed the market to erase a triple-digit decline from Friday, which brought stocks to their first weekly decline in a month. In fact, it was the Dow's second gain of 100 points or more this month and the fifth since the beginning of April. Year-to-date the Dow is off 2.9%. 

The Nasdaq Composite advanced further than the broader market on Monday, with tech stocks following the lead of BlackBerry maker Research in Motion (RIMM), which soared 6.9% to an all-time high on the release of its 3G BlackBerry Bold device. 

On the Dow, aluminum giant Alcoa (AA) gained 6.5% to lead the index after Citigroup (C) reportedly boosted the company's 2008-2010 earnings outlook well above Wall Street's estimates and increased its price estimates for aluminum. Also, Morgan Stanley (MS) upped the firm's price target on Alcoa to $47 from $44, according to Thomson Reuters.

On the downside, insurer AIG (AIG) continued its slump following a $7.8 billion first-quarter loss, falling another 4.7% to a 52-week low. Former Chief Executive Maurice "Hank" Greenberg told the company's board: "AIG is in crisis," according to an SEC filing. 

It's important to note that Monday's rally lacked conviction, as evidenced by relatively low volume on the New York Stock Exchange of about 1 billion shares, nearly 500 million below an average day's levels. 

Much of Monday's strength stemmed from the retail sector, which jumped more than 2% collectively after Ann Taylor (ANN) lifted its first-quarter profit outlook well above the market's expectations. Shares of Ann Taylor soared 16% and the news helped lift other names like Wal-Mart (WMT) and Best Buy (BBY).

"This sector has just been annihilated so people think it’s a good place to put some money...Maybe the worst is over," said Anthony Conroy, head trader at BNY ConvergEx. 

The rally comes a day before the government is scheduled to release April retail sales, which are expected to have increased a meager 0.1%. However, Wall Street may be betting these figures will beat expectations after many retailers reported stronger-than-expected monthly sales last week.

“Any good economic numbers suggesting the worst of the decline of economic activity is behind us would obviously mean higher [stock] prices ahead," said Peter Cardillo, chief market economist at Avalon Partners. 

Meanwhile, Wall Street was cheering a pullback in oil prices, which were a major source of consternation last week. Crude declined on "profit taking" and closed at $124.23 a barrel in New York after earlier hitting an all-time record of $126.40 a barrel. While the decline was a welcomed sign for the broader market -- especially retailers and airline stocks -- the energy sector declined on the lower prices.

Merger talk also lifted traders' spirits on Monday as it could be an indication that the credit markets may be thawing from the freeze that has prevented major deals from getting done in the recent past. Hewlett-Packard (HPQ) is reportedly in advanced talks to acquire Electronic Data Systems (EDS) for up to $13 billion. Also, Clear Channel Communications (CCU) is in talks to settle a lawsuit with a consortium of banks that had balked at providing financing for its buyout. 

The financial sector provided Wall Street with some better-than-expected news: HSBC (HBC), Europe's largest bank, reported lower writedowns than the market had been bracing for and bond insurer MBIA (MBI) didn't say it needs more cash even though it disclosed a huge $2.41 billion first-quarter loss. 

Corporate Movers

Hewlett-Packard (HPQ) is in advanced talks to acquire Electronic Data Systems (EDS). An offer from Hewlett-Packard could come as early as Tuesday and would value EDS at between $12 billion and $13 billion, The Wall Street Journal reported. Shares of EDS surged more than 25% to its highest level since August just minutes after the news broke on Monday afternoon. However, HP took a 5% hit on the report. Ahead of Monday's closing bell trading on both HP and EDS were halted on news pending. 

Clear Channel Communications (CCU) may have hit a major breakthrough on Monday in its bid to go private by reaching a settlement with major banks to provide financing for the deal, The Wall Street Journal reported. Shares of Clear Channel soared 9.6% on the report, which also said the deal is for $36 per share, compared to the original agreement for $39.20. Private equity firms Thomas H. Lee Partners and Bain Capital sued several banks for failing to follow through on a deal to provide financing for Clear Channel to be sold to them and taken private. The banking consortium includes Citigroup (C), Morgan Stanley (MS), Credit Suisse (CS), Deutsche Bank (DB), Wachovia (WB) and Royal Bank of Scotland (RBS). 

Sprint Nextel (S), the nation's third-largest wireless carrier, beat the Street with its first-quarter results but reported a loss of 1.1 million subscribers during the period. Shares of Sprint slid 1.9% on the results. The telecom declined to give a hint about its intentions for the struggling Nextel unit, which Sprint has reportedly been thinking about shedding. Sprint's adjusted-earnings of 4 cents per share topped estimates from Thomson Reuters of 2 cents. Revenue declined 7.5% to $9.3 billion, $100 million below estimates. 

Apple (AAPL) jumped 2.3% after Piper Jaffray said it believes an announcement on a 3G iPhone is "imminent," according to Thomson Reuters. Also, BMO Capital upped its price target for Apple to $205 from $180 "given the continued strength of computer demand, as well as the pending launch of the 3G iPhone," according to Thomson Reuters. 

Cablevision (CVC) declined 1.8% after it said it will purchase Long Island-based newspaper Newsday from Tribune Co. for $650 million. The deal will give Cablevision a 97% stake in Newsday and leave Tribune with a 3% stake. 

FedEx (FDX) provided clear evidence of the impact of soaring oil prices late last week by slashing its fiscal fourth-quarter earnings forecast. The shipping giant cited a $100 million surge in its fuel costs from previous estimates for the current quarter. Despite the bearish sentiment, FedEx closed the day flat. 

HSBC (HBC) rose 3.1% after it posted a first-quarter profit of $255 million. HSBC, which was the first of the Wall Street banks to report a problem with subprime mortgages last year, also said it believes the U.S. economy will continue to deteriorate and expects the housing slump to worsen before its gets better.

MBIA (MBI), the struggling bond insurer, widely missed estimates with its third consecutive quarterly loss. The company said it lost $2.41 billion in the first quarter on $3.58 billion in writedowns amid the credit freeze. MBIA’s $13.03 per share loss for the period compares with a $198.6 million, or $1.46 per share, profit just a year ago. Analysts polled by Thomson Reuters predicted a much smaller loss of 19 cents. Still, shares of MBIA rose 4.5% as the company said it was able to bring in $711.4 million in revenue. 

AIG’s (AIG) recent turmoil, including a recently announced $7.8 billion first-quarter loss, could force the company to split up some of its profitable businesses, according to published reports. International Lease Finance Corp., a successful airplane-leasing company, is considering a split from its parent company AIG, The Wall Street Journal reported.

World Markets

The Dow Jones Euro 50, the 50 largest companies of Europe, gained 11.10 points, or 0.29%, to 3812.69. London's FTSE 100 rose 15.90 points, or 0.26%, to 6220.60.

France's CAC 40 Index picked up 15.65 points, or 0.32%, to 4976.21 and Germany's DAX rose 32.78 points, or 0.47%, to 7035.95.

Japan's Nikkei 225 rose 88.02 points, or 0.64%, to 13743.36.