Stocks rose sharply Monday as Wall Street joined overseas stock markets in riding a wave of merger news to bounce back from a losing week. The Dow Jones industrials at times showed more than 100 points growth.

The buyout news, particularly the possibility of an enormous deal that would unite Dutch bank ABN Amro Holding NV with British bank Barclays PLC, propelled stocks higher as investors theorized that companies, since they're willing to cut new deals, remain upbeat about the economy.

The advance came at the start of an important week for economic data; reports will include the Chicago Federal Reserve's take on manufacturing in the Midwest. The market was also waiting for Tuesday's start of the U.S. Federal Reserve's two-day meeting on interest rates. While few expect the Fed will adjust short-term interest rates, investors will be looking for any change in the central bank's posture that could hint at where rates are headed in the coming months.

In late morning trading, the Dow rose 120.33, or 0.99 percent, to 12,230.74.

Broader stock indicators also moved sharply higher. The Standard & Poor's 500 index rose 15.61, or 1.13 percent, to 1,402.56, and the Nasdaq composite index advanced 24.53, or 1.03 percent, to 2,397.19.

Bonds fell as stocks made gains. The yield on the benchmark 10-year Treasury note rose to 4.56 percent from 4.55 percent late Friday. The dollar was mixed against other major currencies, rising to 117.53 yen from 116.73 yen late Friday. Gold prices rose.

The increase came as stocks overseas showed sharp gains even after China's central banks raised interest rates to try to cool the economy.

Investors are trying to determine if the economy can pull off a so-called soft landing or whether areas of weakness such as the housing sector are poised to drag the economy into a pronounced slowdown.