Wall Street report: Monday close

MEGA-deals and a bullish forecast from one of the country's biggest banks helped shares recoup much of last week's losses in what some analysts think may be the start of a traditional Santa Claus rally.

Mergers between biotech companies Amgen and Immunex and entertainment firms Vivendi and USA Networks announced before the markets opened helped steady nerves frayed last week by the possibility that America might not see the economic rebound many investors had been expecting.

The Dow Jones Industrial Average, down 2.2% last week, recovered 80.82 points or 0.8% to 9,891.97. The Nasdaq Index, after posting its first loss in six weeks last week, surged 34.28 points or 1.8% to 1987.45.

'Historically, the December/January period is a strong one,' said Erik Gustafson, portfolio manager at investment firm Stein, Roe & Farnham. 'While the last couple of years have not seen that, some investors are expecting to see a more positive tone to the December-January timeframe.'

Charles Crane, a strategist for Victory SBSF Capital Management said it 'feels like the market is trying to regain its equilibrium after a rather bumpy week last week. Tech stocks are definitely tilting toward the positive. The deals we've seen announced on the tape today are probably one of the reasons that optimism is prevailing.'

France's Vivendi, which only last week announced it was paying $1.5bn (£966m) for 10% of satellite TV provider EchoStar, said it would take control of USA Networks, the entertainment house headed by former News Corp movie executive Barry Diller, for $10.3bn. The deal will expand Vivendi's clout in television programming through the combined entity, to be called Vivendi Universal Entertainment.

Vivendi's shares jumped $3.15 or 6.4% to $52.10, possibly on relief that it was not paying the $13bn widely reported ahead of the deal's confirmation. USA Networks rose $1.20 or 5% to $25.02 after running up last week on rumours that a deal was imminent.

Biotech giant Amgen mapped its expansion plans by unveiled an agreed deal to buy smaller rival Immunex, which has promising cancer and arthritis drugs, for $16bn. Amgen leapt $3.46 or 6.2% to $59.49 and Immunex vaulted $3.44 or 6.2% to $59.49.

Analysts also cited a report from Mickey Levy, chief economist at Banc of America, as helping boost investor psychology. Levy said he expected a 'vigorous expansion' of the US economy in the second half of next year. He said the rebound would be so strong that the US Federal Reserve Board would be forced to raise interest rates by mid-year.

Techs led the rally, with Intel ahead 70 cents or 1.4% to $33.97 and Microsoft ahead $1.54 or 2.3% to $69.98. Nokia, the cellphone maker, gained 70 cents or 2.8% to $25.34.

Among Dow components, General Electric added 65 cents or 1.7% to $38.30, American Express firmed 89 cents or 2.8% to $33.15, Wal-Mart sped ahead $1.79 or 3.3% to $55.85 and AT&T rose 89 cents or 5.5% to $17.02.

More weakness appeared in the energy patch in the wake of Enron's implosion. Rival and one-time suitor Dynegy slipped another $2.14 or 8.6% to $22.80. The firm said it would sell assets and shares and cut costs to free up $1.25bn next year after Moody's Investor Services cut its debt rating last week. Calpine, an energy company caught up in fears that another Enron might be awaiting investors, fell 38 cents or 2.9% to $12.82. Enron lost one cent or 1.6% to 62 cents, from $84 a year ago.

Ford Motor was marked down 16 cents or 1% to $15.94 on reports it would announce more job cuts in its ongoing restructuring. The company said it would raise $6.5bn for general corporate purposes.

British Airways' US shares fell 65 cents or 2.2% to $28.70 and its partner American Airlines shed 62 cents or 2.7% to $22.50 as the Justice Department said it would oppose an expansion of their alliance unless they agreed to give up some transatlantic flights. The airlines said the Department's action was not unexpected and that they would file additional material with the US Government to show the benefits of their partnership.