NEW YORK (AP) - Wall Street's recovery from last month's plunge gained momentum Monday, with stocks rising as investors looked past widening cracks in the subprime lending sector and bought in response to another parade of acquisition deals.
New Century Financial Corp.'s warning that its lenders had suspended financing initially overshadowed acquisition news involving companies such as Dollar General Corp. and Schering-Plough Inc. Investors have dealt with concerns that a blowup among companies making loans to consumers with poor credit could spill into other industries.
''The market actually has handled the cutoff by financing arms to New Century in a fairly decent way,'' said Frederic Dickson, market strategist and director of retail research at D.A. Davidson & Co. ''While there are some subprime jitters it hasn't spilled broadly either into the financial sector or across the entire market.''
He said investors appeared to grow emboldened by the merger deals announced Monday. Technology shares also received a boost ahead of a midquarter update from Texas Instruments Inc., which tightened its financial targets after the closing bell Monday.
The Dow Jones industrial average rose 42.30, or 0.34 percent, to 12,318.62.
Broader stock indicators also rose. The Standard & Poor's 500 index advanced 3.75, or 0.27 percent, to 1,406.60, and the Nasdaq composite index rose 14.74, or 0.62 percent, to 2,402.29.
Bonds rose amid concerns about subprime lenders; the yield on the benchmark 10-year Treasury note fell to 4.56 percent from 4.59 percent late Friday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude settled down $1.14 to $58.91 per barrel on the New York Mercantile Exchange.
Monday's trading saw the low volatility that has characterized much of the last eight months. Many sessions since the worldwide selloff that began Feb. 27 have seen much more choppiness as investors hunted for signs of where the market was headed, but Monday's trading perhaps reflected a further sense that Wall Street had regained its footing. Investors will be looking to economic data due this week on retail sales and inflation and at earnings news as brokerages announce results.
The day's buyout news offered support for stocks amid the din over subprime lenders. The concerns about the subprime sector followed a relatively successful week on Wall Street. Stocks etched out gains last week U.S. and overseas markets managed to regain some sense of stability following the sharp pullback late last month. Concerns about subprime lenders remained still weighed on investors.
New Century Financial Corp. warned Monday in a filing with the Securities and Exchange Commission that all its lenders had cut off short-term funding or announced plans to do so after the subprime mortgage lender wasn't able to make payments. New Century, which relies on short-term borrowings to finance mortgage loan originations and purchases, said it would need about $8.4 billion should it be forced to repurchase all outstanding mortgage loans. The company said it doesn't have sufficient liquidity to meet its obligations for repurchasing mortgages.
Trading in New Century shares remained halted with news pending for the entire session Monday. The New York Stock Exchange said it is reviewing the listing status of New Century shares.
Other subprime lenders fell sharply. Fremont General fell $1.30, or 16.2 percent, to $6.73, while Novastar Financial Inc. fell $1, or 19.1 percent, to $4.24.
Homebuilders also fell in part amid concerns that tightening credit standards would make it harder for consumers with lower incomes or spotty credit to purchase homes. Hovnanian Enterprises Inc. fell $1.75, or 6 percent, to $27.59, while Pulte Homes Inc. fell $1.38, or 4.8 percent, to $27.38.
In other corporate news, word that private-equity company Kohlberg Kravis Roberts & Co. struck a deal to acquire Dollar General for about $6.87 billion sent the discount retailer sharply higher. Dollar General jumped $4.29, or 25.6 percent, to $21.07 - well past the stock's 52-week high of $18.32.
Schering-Plough fell rose 10 cents to $23.95 after agreeing to purchase the Organon BioSciences BV pharmaceuticals business of Akzo Nobel NV, the Dutch maker of chemicals and coatings, for $14.5 billion. Akzo climbed $10.02, or 16.5 percent, to $70.83.
Health insurer UnitedHealth Group Inc. announced plans to acquire Sierra Health Services Inc., which provides health care services, for about $2.6 billion. Sierra Health rose $5.67, or 15.8 percent, to $41.57, while UnitedHealth advanced 27 cents to $53.27.
Procter & Gamble Co., the consumer products company, said it struck a deal to sell its Western European tissue and towel business to SCA, which makes paper and other products, for about $671.9 million. P&G, one of the 30 stocks that makes up the Dow industrials, fell 7 cents to $62.09.
Advancing issues outnumbered decliners by about 2 to 1 on the NYSE, where volume came to 2.62 billion shares, compared with 2.59 billion shares billion Friday.
The Russell 2000 index of smaller companies rose 3.88, or 0.49 percent, to 789.00.
Overseas, Japan's Nikkei stock average rose 0.75 percent, Hong Kong's Hang Seng index added 1.61 percent and the Shanghai Composite Index added 0.58 percent. Britain's FTSE 100 closed down 0.19 percent, Germany's DAX index fell 0.02 percent, and France's CAC-40 fell 0.75 percent.