By Chuck Mikolajczak
NEW YORK (Reuters) - U.S. stocks rose on Monday, buoyed by the latest flurry of merger activity and earnings from Citigroup, putting the S&P 500 on pace to climb for a second straight session.
London-listed drugmaker Shire Plc said it was ready to recommend to agree to an increased 31 billion pounds ($53 billion) takeover offer from Abbvie Inc, ending a long-running courtship largely motivated by tax rates. U.S.-listed shares of Shire rose 1.9 percent to $253.71 while Abbvie shed 0.9 percent to $54.45.
Generic drugmaker Mylan Inc said it would buy Abbott Laboratories' specialty and branded generics business outside the United States in an all-stock transaction valued at about $5.3 billion. Mylan shares advanced 1.9 percent to $51.17 before the opening bell. Abbott shares rose 0.5 percent to $41.52.
Citigroup Inc shares rose 3.9 percent to $48.83 as one of the top boosts to the S&P 500 after it posted second-quarter earnings and agreed to pay $7 billion to settle a U.S. government investigation into mortgage-backed securities. The S&P financial index gained 0.8 percent.
Earnings season will pick up speed this week, with 59 S&P 500 components scheduled to report. S&P 500 profits are seen growing 6.2 percent in the second quarter, according to Thomson Reuters data, down from the 8.4 percent growth forecast at the start of April. Revenue is seen up 3.1 percent.
In order to justify current stock prices, analysts are looking to earnings to confirm the economy recovered in the second quarter from the impact of a harsh winter.
"It's very important to see this reversal now in the economy heading into the second quarter," said Anastasia Amoroso, Global Market Strategist with J.P. Morgan Funds, in New York. "The second quarter earnings should solidify that we did reverse the negativity of the first quarter."
Goldman Sachs analyst David Kostin raised his 2014 target for the S&P 500 to 2,050 from 1,900, citing expectations that yields on the 10-year Treasury note will be around 3 percent and will continue to push investors into stocks as they search for higher returns.
The Dow Jones industrial average rose 126.83 points or 0.75 percent, to 17,070.64, the S&P 500 gained 10.68 points or 0.54 percent, to 1,978.25 and the Nasdaq Composite added 25.16 points or 0.57 percent, to 4,440.65.
Engineering design firm AECOM Technology Corp on Sunday said it would pay about $4 billion to acquire engineering and construction services firm URS Corp. URS shares jumped 9.1 percent to $56.73 and AECOM gained 3.8 percent to $32.97.
(Reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama and Nick Zieminski)
