Stock market news: Tech stocks rally after IBM, Red Hat deal

Traders
work on the floor of the New York Stock Exchange ahead of the
opening bell in New York
Thomson
Reuters

Stocks rose Monday as Wall Street
shook off fears about rising rates and signs of slowing growth
that have weighed on global markets this month.

The Dow Jones
Industrial Average rose 0.82%, or about 200 points. The
Nasdaq
Composite jumped 1.2%, and the S&P
500 was up 1.3%. After a series of sharp sell-offs in recent
weeks, the US indices are on track for their worst month since
the financial crisis.

Tech stocks were off to a hot
start after IBM announced on Sunday that it would buy Red Hat in

a nearly $34 billion deal, its largest acquisition yet. The
deal, which pays Red Hat stockholders $190 a share, comes at a
more than 60% premium to where shares settled on Friday.

Elsewhere, earnings season
continues, with HSBC
posting a 28% jump in pre-tax profits for the third quarter.
After choppy results from high-flying technology companies like
Amazon
and Google parent company Alphabet
had set off alarm last week, investors will be closely watching
Facebook
and General
Electric earnings Tuesday.

“Given the recent sell-off in
equities on growth concerns and the importance of tech in the
bull market rally, the short-term negative spillover is
understandable,” said Jon Gordon of UBS Global Wealth
Management.

“But while recent weakness in
semiconductors in part reflects a cyclical downturn in demand, we
don’t expect tech weakness to undermine the broader market on a
sustainable basis.”

Across the Atlantic, German
Chancellor Angela Merkel announced she would not seek re-election
as leader of the Christian Democratic Union in 2021. The Stoxx
Europe 600 was up 1.7% in afternoon trading, with carmakers
leading the way higher after Bloomberg
reported Beijing is considering
cutting its tax on vehicles in half.

Italy dodged a credit downgrade
by S&P, easing fears about public spending plans that have
brought its populist government head to head with Brussels. Last
week, Moody’s cut Rome’s credit rating to one level above
junk.