NEW YORK — Wall Street rose modestly today after Bank of America Corp. posted results that beat expectations, raising hope the credit crisis might be easing for the nation's biggest retail banks.

The largest U.S. bank by assets reported that higher investment banking and record revenue helped drive earnings during the second quarter. With BofA's results, four of the nation's five biggest banks have now reported better-than-expected earnings, and that's raising hopes that the financial sector is starting to recover from the year-old credit crisis.

Investors also were optimistic that mergers and acquisitions, which have been sluggish since the credit crisis began last year, might be reviving. Swiss drug maker Roche Holding announced plans to acquire the stake in Genentech Inc. it doesn't already won for $43.7 billion, making it the seventh-largest pharmaceuticals company in the U.S.

However, for the time being it appears that Yahoo Inc. has staved off an attempt by activist shareholder Carl Icahn to take control of the Internet company. Icahn, who has argued in favor of selling Yahoo to Microsoft Corp., will become a Yahoo director along with two of his nominees.

There are a number of key earnings reports expected during the day, including Apple Inc., drug makers Merck & Co. and Schering-Plough Corp., and chipmaker Texas Instruments Inc. Some 158 members of the Standard & Poor's 500 index and 10 members of the Dow Jones industrials are slated to post results this week.

Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said the market is feeling somewhat upbeat about how earnings are shaping up so far this quarter. And that's helped to maintain some of last week's market gains.

"The second half of last week we had a tremendous bounce, and the fact that we're not giving any of it up is outstanding," Detrick said. "We're having some more good news from the financials — it wasn't as bad as feared. And we've also got some buyout deals."

In late morning trading, the Dow Jones industrial average rose 14.09, or 0.12 percent, to 11,510.66.

Broader indexes were also higher. The Standard & Poor's 500 index added 3.51, or 0.28 percent, to 1,264.19; and the Nasdaq composite rose 7.67, or 0.34 percent, to 2,290.45.

On Friday, Wall Street closed out an impressive week: The Dow rose 3.57 percent, the Nasdaq increased 1.95 percent, and the S&P rose 1.71 percent.

Bond prices dipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, edged up to 4.10 percent from 4.09 percent from late Friday.

The dollar was mixed against other major currencies, while gold prices rose.

Oil prices moved higher. Light, sweet crude rose $1.14 to $130.02 on the New York Mercantile Exchange. Prices fluctuated in overnight trading on concerns the threat of new sanctions against Iran over its nuclear program may escalate tensions in the oil-rich Middle East.

In economic news, Treasury Secretary Henry Paulson sought to reassure the public Sunday that the banking system is sound, while also preparing people for more troubled times ahead. "I think it's going to be months that we're working our way through this period — clearly months," he said.

And that was confirmed by more economic data Monday. The Conference Board said the economy contracted in June as factories cut workers' hours and stocks tumbled. The research group's index of leading economic indicators, a gauge of future economic activity, fell 0.1 percent, in line with estimates by Wall Street economists surveyed by Thomson Financial/IFR. It also revised its May figure to show a decline instead of slight growth.

Genentech surged $10.86, or 13.3 percent, to $92.71 on speculation that Roche might have to offer more to acquire the company — or face the possibility of another bidder. Shares of the U.S. drug maker are now trading at a 52-week high.

BofA rose $3.06, or 11.2 percent, to $30.61. An increase in bad debts due to the ongoing housing slump pushed profit down 41 percent, but it still surpassed expectations due to a solid performance in its non-real estate businesses.

Toymaker Hasbro Inc. said second-quarter profit rose, helped by the weaker dollar and demand for toys inspired by "Star Wars" and "Indiana Jones." Sales jumped 13 percent to $784.3 million. However, concerns about costs and a campaign to raise prices pushed shares down 81 cents to $37.18.

Advancing issues led decliners by a 3-to-2 basis on the New York Stock Exchange, where volume came to 136.7 million shares.

The Russell 2000 index of smaller companies rose 2.37, or 0.34 percent, to 695.45.

Overseas, Japan's Nikkei stock average fell 0.65 percent. In afternoon trading, Britain's FTSE 100 rose 0.28 percent, Germany's DAX index added 0.73 percent, and France's CAC-40 rose 0.61 percent.