Oil prices fell for the third straight day, sliding more than $1 a barrel after Hurricane Dennis missed key Gulf of Mexico refineries, averting a disruption in fuel supplies. Wall Street has been nervously watching oil prices, worried that further increases would curb consumer spending and chip away at corporate profits.

Light sweet crude for August delivery fell 71 cents to $58.92 a barrel on New York Mercantile Exchange.

News of corporate deals in telecom, banking and pharmaceuticals boosted stocks, too, stoking investors' hopes that second-quarter earnings might be stronger than expected. Investors welcomed the deals as a sign that companies feel secure enough to spend some of the cash they accumulated during the earnings run-up of the past two years. Standard & Poor's 500 companies, for instance, have the largest cash reserve in the S&P's history.

The Dow Jones industrial average rose 70.58, or 0.7 percent, to 10,519.72. The Dow rose 146.85, or 1.43 percent, on Friday.

Broader stock indicators also rose. The S&P 500 index rose 7.58, or 0.6 percent, to 1,219.44. The index is now higher for the year. The Nasdaq composite index rose 22.55, or 1.1 percent, to 2,135.43.

The Russell 2000 index of smaller companies is at an all-time high. It rose 9.60, or 1.4 percent, to 671.74, as investors flock to specialized small-cap companies, which are seen as an alternative to larger companies that are more vulnerable to swings in oil prices.

Bonds rose slightly, with the yield on the 10-year Treasury note at 4.10 percent, compared to 4.11 percent late Friday. The U.S. dollar fell against other major currencies. Gold prices were higher.

Stocks stayed within the narrow trading range of the last year-and-a-half. "The market is just kind of waiting," said Bob Baur, managing director and head of global trading at Principal Global Investors. "They're waiting for the Fed to stop raising rates, they're waiting for earnings to slow, they're waiting for oil to stop rising."

Today's deals included a report that Goldman Sachs Group Inc. and German financial firm Allianz are in talks to buy a $1 billion-plus stake in one of China's largest state-owned commercial banks. Drug distributor McKesson Corp. said it would buy a smaller regional distributor and Dutch media company VNU NV said it would buy U.S.-based health care data provider IMS Health Inc. in a cash and stock deal valued at more than $6 billion.

While the merger activity lifted the market's mood, investors are also buying for fundamental reasons, said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee. "People are underinvested and interest rates are relatively low," he said.

The talks involving Goldman Sachs, Allianz and the Commercial Bank of China are at an early stage, according to a report on The Asian Wall Street Journal's Web site, which cited unidentified sources. Goldman Sachs rose $1.66 to $107.31. Allianz rose 21 cents to $11.99

Other companies involved in deals gained as well. IMS rose 61 cents to $26.50. McKesson rose 66 cents to $45.21and the regional distributor it is buying, D&K Healthcare Resources rose $5.80 to $14.30.

Sprint Corp. rose 7 cents to $25.45 after it said it would acquire U.S. Unwired Inc. for $1.3 billion. U.S. Unwired, which provides Sprint PCS cellular services in nine states, is valued at $6.25 per share in the agreement. U.S. Unwired rose 4 cents to $6.20.

Procter & Gamble Co. shares rose 94 cents to $53.90, lifted by a brokerage note from Prudential Equity Group predicting its stock price will rise once it completes its acquisition of Gillette Co. And DuPont Co. rose 65 cents to $44.15 after Deutsche Bank upgraded its stock.

Merck & Co. rose 24 cents to $31.24 as jury selection began in Texas for the first trial alleging the drug maker knew of the dangers posed by its popular painkiller Vioxx long before it voluntarily pulled the drug from the market last year. "We intend to defend these cases individually over many years," Merck's general counsel, Kenneth C. Frazier, said in a statement. The company's most recent lawsuit count reached 3,857.

DreamWorks Animation SKG Inc., creator of animated hits "Shrek" and "Shark Tale," warned of a loss in the second quarter, cut its full-year forecast and said the Securities and Exchange Commission is investigating its stock trading and the release of its first-quarter results. Its stock dropped $3.54 to $23.27.

Morgan Stanley rose 45 cents to $53.57 after it announced Co-President Stephen S. Crawford resigned from the financial services firm, while Co-President Zoe Cruz was appointed acting president.

Advancers led decliners by more than 2 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 1.84 billion shares, down from 1.91 billion shares Friday.

Overseas, Japanese stocks rose to a 13-week high today as major exporters like Honda Motor Co. benefited from Wall Street's gains Friday. Japan's Nikkei stock average rose 108.80 points, or 0.94 percent. Britain's FTSE 100 was up 0.19 percent, Germany's DAX index was up 1.42 percent, and France's CAC-40 was up 0.49 percent.