Wall Street gains as earnings, M&A offset Egypt concerns

NEW YORK (Reuters) – U.S. stocks rose on Monday as solid earnings, merger activity and better-than-expected economic data renewed some of the risk appetite that evaporated last week on uncertainties over stability in the Middle East.

Wall Street posted its biggest one-day loss in nearly six months on Friday as anti-government rioting in Egypt sparked a flight to less risky assets. The uprising continued on Monday, but investors seemed to have calmed down.

"I think it would take more than protests in Egypt to take this market down. The earnings continue to come in better than expected, but I am looking for a correction," said Jeffrey Saut, chief investment strategist at Raymond James in St. Petersburg, Florida.

The Dow Jones industrial average was up 33.15 points, or 0.28 percent, at 11,856.85. The Standard & Poor's 500 Index was up 6.95 points, or 0.54 percent, at 1,283.29. The Nasdaq Composite Index was up 7.17 points, or 0.27 percent, at 2,694.06.

Stocks held gains even after technology bellwether Intel Corp fell 1 percent to $21.24 after cutting its first-quarter revenue forecast by $300 million due to costs for correcting a design flaw in one of its chips.

"It doesn't have any impact for the balance of the sector. This is a very Intel specific thing," said Nicholas Aberle, semi-conductor analyst at Janney Montgomery Scott in San Francisco. "It's a negative for Intel because it has to clean up the mess, but there is no competition for Intel for this type of chip."

The M&A activity, typically a sign of confidence in the market, included Alpha Natural Resources, which fell 7.5 percent to $53.51 after it agreed to a $7.1 billion deal to buy Massey Energy Co, which would create the second largest U.S. coal miner by market value.

Massey shares jumped 10 percent to $62.94.

The merger and earnings action offset the fears of political unrest spreading to oil-producing Middle Eastern countries.

In other M&A action, CNOOC Ltd will pay $1.3 billion in its second shale deal with America's Chesapeake Energy Corp, the latest move by China's top offshore oil producer in its aggressive drive for overseas acquisitions.

Chesapeake advanced 5.7 percent to $28.91.

Exxon Mobil Corp gained 1.1 percent to $79.85 after the world's largest publicly traded oil company reported a higher-than-expected 53 percent increase in quarterly profit.

The Commerce Department said U.S. consumer spending rose in December for a sixth straight month, while a separate report showed business activity in the U.S. Midwest grew more than expected in January.

(Additional reporting by Richard Leong, Ryan Vlastelica, Editing by Leslie Adler)