Stocks gain broadly after Intel deal for chip designer

Stocks rose on Monday after the release of some encouraging economic data and news of a big acquisition in the semiconductor industry.

The gains were modest, but broad. Eight of the 10 industry sectors in the Standard and Poor’s 500 index ended higher, led by industrial stocks with a gain of 0.4 percent.

The biggest gainer in the S&P 500 was chip designer Altera, the target of a $17 billion cash offer by giant chip-maker Intel. Altera jumped $2.83 to $51.68, a 6 percent gain. Companies have been combining at a rapid clip, helping to boost stocks in the seventh year of the bull market.

The S&P 500 rose 4.34 points, or 0.2 percent, to 2,111.73. The Dow Jones industrial average rose 29.69 points, or 0.2 percent, to 18,040.37. The Nasdaq composite climbed 12.90 points, or 0.3 percent, to 5,082.93.

In economic news, U.S. manufacturing growth accelerated in May for the first time in six months, propelled by more new orders and an increase in hiring, according to the Institute for Supply Management, a trade group. A separate report showed construction spending climbed in April to the highest level in more than six years.

Investors are anxious about U.S. growth following a series of weak data, capped by news Friday that the economy shrank in the first three months of the year. They’ll have a better sense of the growth outlook later this week after several other economic reports are released, culminating Friday with one on hiring in May.

“The market is looking at the data and saying, this is good,” said Mizuho Securities’ chief economist Steven Ricchiuto, referring to Monday’s construction and factory reports. “It supports the idea that GDP will rebound in the second quarter.”

Ricchiuto cautioned that he doesn’t think economic growth will be fast enough to result in big corporate profit gains that will push stock prices higher. Earnings for companies in the S&P 500 are expected to rise just 0.6 percent for the full year, according to the S&P Capital IQ, a research firm.

Investors are also anxious about when the Federal Reserve will raise short-term interest rates. It has held them near zero since for more than six years to encourage borrowing and spending.

The Altera deal follows several other blockbuster corporate deals recently, including a $55 billion acquisition by Charter Communications for rival Time Warner Cable last week. So far this year, more than $700 billion in deals have been announced, a 43 percent jump from the same period a year ago, according to S&P Capital IQ.

Intel fell 55 cents to $33.91, a loss of 1.6 percent, the biggest drop in the Dow index.

Among other stocks making big moves, the solid construction data helped push up homebuilders. D.R. Horton rose 32 cents, or 1.2 percent, to $26.44. Toll Brothers rose 38 cents, or 1.2 percent, to $36.55.

In Europe, tensions remain high as Greece inches closer to a Friday deadline to make a debt payment to the International Monetary Fund. Greece is struggling to convince the IMF and creditors in Europe that it has a reform strategy in place so it can get access to more bailout cash.

“Concerns about Greece continue to hold investors back from taking on too much risk,” said Fawad Razaqzada, an analyst at Forex.com.

Germany’s DAX rose 0.2 percent while the CAC-40 in France gained 0.4 percent. Britain’s FTSE 100 fell 0.4 percent.

In Asia, the Shanghai Composite jumped 4.7 percent following a steep plunge last week triggered partly by a pullback on lending to investors at brokerages. Officials in China are worried that stocks have risen too far, too fast. The index is up 137 percent in the past 12 months.

The price of oil slipped slightly as the dollar gained strength, making oil less attractive to holders of foreign currencies. Benchmark U.S. crude fell 10 cents to close at $60.20 a barrel in New York. Brent crude, a benchmark for international oil used by many U.S. refineries, fell 68 cents to close at $64.88 a barrel in London.

In other futures trading on the NYMEX:

— Wholesale gasoline fell 2.1 cents to close at $2.042 a gallon.

— Heating oil fell 2.4 cents to close at $1.926 a gallon.

— Natural gas rose 7 cents to close at $2.649 per 1,000 cubic feet.

In the currency markets, the euro was little changed at $1.0931 and the dollar rose slightly to 124.79 Japanese yen.

U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 2.18 percent from 2.12 percent late Friday.

Precious and industrial metals futures closed broadly lower. Gold fell $1.10 to $1,188.70 an ounce. Silver fell two cents to $16.68 an ounce. Copper edged down a penny to $2.72 a pound.