US stocks climbed to record highs on Monday, helped by optimism about merger activity and as investors bet that a Republican plan to cut corporate taxes would bolster earnings.
Qualcomm rose 1.15 per cent after Broadcom offered to buy the smartphone chip supplier for $103 billion in what could be the biggest-ever acquisition in the tech sector. Broadcom added 1.42 per cent.
“The fact that the deal is on the table is huge,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
“We have not seen much in the way of dealmaking this year. So this might jump-start some of the dealmaking ahead of the tax policy changes.”
Twenty-First Century Fox surged 9.93 per cent after CNBC reported that the film and television conglomerate has held talks to sell most of the company to media giant Walt Disney Co . Disney shares rose 2.02 per cent.
Corporate tax cuts
Investor optimism was also fuelled by a Republican proposal last week to slash the corporate tax rate to 20 per cent from 35 per cent and end some tax breaks for companies and individuals.
“I think that has to be the main driver,” said John Brady, managing director at R.J. O'Brien & Associates in Chicago. “Even if it only goes to 25 percent or 27 percent, it's still moving the right way.”
Apple rose 1.01 per cent and contributed more than any other stock to the benchmark S&P 500 index's gain.
Shares of Sprint slumped 11.54 per cent to a more than one-year low after the wireless provider and T-Mobile called off a planned merger. T-Mobile lost 5.72 per cent.
All three major indexes closed at record highs.
The Dow Jones Industrial Average inched up 0.04 per cent to end at 23,548.42, while the S&P 500 gained 0.13 per cent to 2,591.13. The Nasdaq Composite added 0.33 per cent to 6,786.44.
Saudi purge
The S&P 500 energy index surged 2.2 per cent on gains in crude prices after the crown prince of Saudi Arabia, the world's largest oil exporter, tightened his grip on power through an anti-corruption purge.
In extended trade, Priceline Group lost 6 per cent and Weight Watchers International jumped 10 per cent after those companies reported quarterly results.
With more than 400 of S&P 500 companies having reported, earnings for the third quarter are expected to have climbed 8 per cent, compared with expectations of a 5.9 per cent rise at the start of October, according to Thomson Reuters I/B/E/S.
Up 15 per cent in 2017, the S&P 500 is trading at about 18 times expected earnings, according to Thomson Reuters Datastream.
Michael Kors jumped 14.70 per cent after the fashion accessories maker raised its 2017 revenue forecast. The stock was the biggest percentage gainer on the S&P.
Advanced Micro Devices jumped 7.28 per cent after a report that it plans to team up with Intel to form a personal computer chip unit. Intel ended 1.37 per cent higher.
Advancing issues outnumbered declining ones on the NYSE by a 1.41-to-1 ratio; on Nasdaq, a 1.17-to-1 ratio favoured advancers. About 6.6 billion shares changed hands on US exchanges, above the 6.4 billion daily average over the last 20 sessions.