US stocks have closed sharply higher as investors welcomed news of more M&A action and solid earnings results from several big name firms.
At the closing bell, the Dow Jones Industrial Average jumped 64.99 points, or 0.40%, to 16,514.24.
The broad-based S&P 500 climbed 7.66 points, or 0.41%, to 1,879.55, while the tech-heavy Nasdaq Composite Index added 39.91 points, or 0.96%, to 4,161.46.
Strong quarterly reports from Netflix, Comcast and Lockheed Martin boosted optimism as earnings season gathered pace. Soft results from McDonald's represented a rare exception to the flow of good news.
General Motors and Apple are among the list of standout names to report later in the week.
Elsewhere, markets cheered news of deals worth close to $30 billion between pharmaceutical giants Novartis, GlaxoSmithKline and Eli Lilly. The news was the latest sign of growing confidence in the marketplace.
The positive outlook was furthered by news Valeant Pharmaceuticals had made a $US45bn play for Botox-maker Allergan.
In economic data, existing home sales numbers in the US were weaker than expected, with high prices considered to have forced many buyers to the sidelines.
"Although today's session began on a quiet note, the key indices rallied after taking the lead from early strength in consumer discretionary ( 1.1%) and health care ( 1.5%) sectors," Briefing.com analyst Patrick O'Hare said.
"Given the early gains in two influential groups, the remainder of the market followed in somewhat reluctant fashion."