Falling Oil Energizes Shares

Stocks gained Monday on their favorite combination of news -- lower oil prices and a flurry of M&A activity. Meanwhile, the bond market remained pessimistically positioned for an economic slowdown, no inflation and an end to Federal Reserve rate hikes.

The tiebreaker in the financial markets' tennis match could be any of the week's important data points, including revised second-quarter GDP, July personal consumption, nonfarm payrolls and the August ISM manufacturing index.

The Dow Jones Industrial Average gained 0.6% to 11,352.01, while the S&P 500 ended the day up 0.5% at 1301.78. The Nasdaq Composite closed up 0.95% to 2160.70.

Fueling the rally in stocks was news that Tropical Storm Ernesto will sidestep the Gulf of Mexico, which sent oil prices down 2.6% to close at $70.61 per barrel. Natural gas fell nearly 10%, or 69 cents, to $6.47 per million British thermal units.

The market was also cheerful about the robust merger activity, including Western Refining's(WNR Quote) offer to buy Giant Industries(GI Quote) for $1.2 billion. Giant's shares jumped 14.5%, while Western Refining's slid 3.27%.

Separately, Kinder Morgan(KMI Quote) agreed to be bought out by a group led by its co-founder Richard Kinder for $15 billion plus $7 billion in assumed debt. The company's shares gained 2.5%.

Energy Partners (EPL Quote) soared 31% on reports that a unit of Australia's Woodside Petroleum wants to buy the company for around $883 million.