Deals Fire Up Stocks

Another private-equity takeout firm, Clayton Dubilier & Rice, is set to pay $5.5 billion, including debt, for ServiceMaster (SVM Quote), a company that provides pest control, cleaning and lawn-care services. ServiceMaster jumped $1.68, or 12.5%, to finish at $15.15.

Community Health Systems (CYH Quote) said it will acquire fellow hospital operator Triad Hospitals (TRI Quote) in a deal worth $6.8 billion, or $54 a share. The deal tops a previous leveraged buyout offer for Triad valued at $50.25 a share. Triad shares were up $2.59, or 5.3%, to end the session at $51.95.

Lastly, Take-Two (TTWO Quote) closed 8.4% higher after the video-game maker said it is considering a sale of the company as a new strategy. Take-Two, which is fighting a shareholder group looking to change the company's board, added $1.76 to $22.61.

The market's jump comes a day before the beginning of the next scheduled two-day Federal Reserve policy meeting. It is expected the Fed will leave interest rates unchanged at 5.25% for the sixth-straight meeting when it issues its statement on Wednesday.

"Today's inflation rates are above those desired by the Fed, so expectations are still high for still-higher rates to keep inflation under wraps," said Paul Nolte, director of investments with Hinsdale Associates. "However, inflation rates are still well below those of 2000."

Marc Pado, U.S. market strategist with Cantor Fitzgerald, believes this week's news could ultimately favor the bears. "A technical failure would have the bulls on the defensive," he said.

The major indices each are still in negative territory for 2007. The Dow is now down 1.9% for the year. Meanwhile, the S&P 500 has fallen 1.1%, and the Nasdaq has given back 0.9%.