Deal Talk Fires Up Stocks

Updated from 4:08 p.m. EDT

Stocks in New York closed solidly higher Wednesday as merger chatter in the financial sector cheered traders, who have been laid low recently by the troubles in the credit market.

The Dow Jones Industrial Average gained 145.27 points, or 1.11%, to 13,236.13. All but two of the Dow's 30 stocks were in the black, led by a 4.7% gain in Alcoa (AA Quote - Cramer on AA - Stock Picks).

The S&P 500 added 16.95 points, or 1.17%, to 1464.07, and the Nasdaq Composite rose 31.50 points, or 1.25%, to 2552.80.

While the major averages finished mixed on Tuesday amid concerns about the credit crisis and whether the Federal Reserve will cut rates, a potentially big tie-up was acting as a buying catalyst.

According to The Wall Street Journal, E*Trade Financial (ETFC Quote - Cramer on ETFC - Stock Picks) and TD Ameritrade (AMTD Quote - Cramer on AMTD - Stock Picks) were in discussions for a possible deal that would create a $20 billion brokerage firm.

E*Trade ended lower by 2.1% to $15.25, while TD Ameritrade climbed 4.9% to $17.15.

But that wasn't the only development on the M&A front. MGM Mirage (MGM Quote - Cramer on MGM - Stock Picks) approved a $5 billion transaction in which holding company Dubai World will take a 9.5% stake in the casino operator and get 50% ownership in the company's CityCenter project in Las Vegas. MGM surged $6.62, or 8.9%, to $80.94.

Meanwhile, Nymex Holdings (NMX Quote - Cramer on NMX - Stock Picks) said it has held discussions with potential buyers. The stock jumped $7.28, or 6.1%, to $126.06. NYSE Euronext (NYX Quote - Cramer on NYX - Stock Picks), considered to be one of the interested parties, added 1.4%.

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