Stocks go higher amid light volume

NEW YORK » Investors welcomed the possibility of increased merger activity and sent stocks higher yesterday despite a lack of other news that kept trading volume light. The Nasdaq composite index reached a five-year high after a modest gain.

With Citigroup Inc. freed to pursue expansion by federal regulators and Computer Sciences Corp. putting itself up for sale, investors were cheered by the potential for merger and acquisition activity to remain strong through the rest of the year.

However, there were no new economic reports or major corporate earnings and some investors held off from making big bets ahead of Friday's Labor Department report on job creation, a key barometer of economic health.

"There's fairly widespread anticipation that the economic numbers this week will be solid, though not great, and I think the market is reflecting that," said Hugh Johnson, chief investment officer at Johnson Illington Advisors.

The Nasdaq composite index gained 8.62, or 0.37 percent, to 2,345.36. It was the index's best showing since Feb. 16, 2001, when it closed at 2,425.38.

Other stock indicators also moved higher. The Dow Jones industrial average rose 58.91, or 0.53 percent, to 11,203.85, and the Standard & Poor's 500 index added 8.12, or 0.63 percent, to 1,305.93.

Oil prices fell as traders took profits from the recent rally, though concerns about the political situations in Iran and Nigeria continued to pressure the market. A barrel of light crude settled at $66.23, down 51 cents on the New York Mercantile Exchange.

In corporate news, Dow industrial Citigroup gained 80 cents to $48.21 after the Federal Reserve Bank of New York lifted a year-long ban on new acquisitions as the financial conglomerate worked to improve its internal compliance programs.

Computer Sciences announced its intention to examine "strategic alternatives" -- including a sale of the company -- while also cutting 5,000 jobs, or 6 percent of its work force, over the next two years. Computer Sciences jumped $2.51 to $59.80.

The potential for increased M&A deals comes as the Federal Reserve is expected to wind down its current program of interest rate hikes. While another increase is expected in May, bringing the nation's benchmark rate to 5 percent, halting rate hikes soon after could prompt companies to renew their acquisition efforts, knowing that rates for borrowing would be stable.