The U.S. stock market rose on Monday as economic reports continued to signal recovery in key sectors of the economy. A healthy appetite for deals and surging chip maker stocks also lifted the market.

The S&P 500 Index rose 11.22 points, or 1.02 percent, to close at 1,115.71. The Dow Jones Industrial Average gained 78.53 points, or 0.76 percent, to close at 10,403.79. The tech heavy Nasdaq Composite closed for a 1.58 percent gain.

Deals

Monday was a busy day for mergers and acquisitions.

Target companies for acquisitions included RiskMetrics (NYSE:RISK), which closed up 13.20 percent, and Millipore (NYSE:MIL), which closed up 1.11 percent.

Astellas Pharma, a Japanese pharmaceutical company, announced a hostile bid for OSI Pharmaceuticals (NASDAQ:OSIP). Shares of OSI closed up 51.94 percent.

Insurance giant AIG (NYSE:AIG) also announced that it will sell its Asian life insurance unit to a U.K. firm for $35.5 billion. Its shares closed up 4.08 percent.

Chip Makers

The Semiconductor Industry Association (SIA) reported Monday that global chip sales in January grew 0.3 percent from last month and 47.2 percent from last year.

SIA Presdient George Scalise said the growth reflected the improving business environment for the industry. He also noted there is upside potential for SIA's 2010 growth forecast if current trends continue.

SanDisk (NASDAQ:SNDK) led the sector with a gain of 11.94 percent. The firm raised its first quarter sales outlook on stronger demands and favorable pricing.

AMD (NYSE:AMD) rose 3.79 percent, NVIDIA (NASDAQ:NVDA) rose 4.01 percent, and Intel (NASDAQ:INTC), the biggest gainer of the Dow, rose 1.66 percent.

Economic Data

Consumer spending for January increased 0.5 percent, which was slightly more than what economists expected. This follows a gain of 0.3 percent in December and marks four consecutive months of expansion.

The ISM Manufacturing PMI was below the median forecast of economists surveyed by Bloomberg. However, the reading did indicate expanding activities in February, which marks the seventh consecutive month of expansion.

The report noted that the Employment Index is very encouraging as it expanded for the third consecutive month.

Manufacturers are seemingly willing to hire where they have orders to support higher employment, the report added.

As market participants digest this improvement in employment in the manufacturing sector, they look ahead to Friday's report of unemployment rate and change in the size non-farm payrolls.

Recent reports in this area have been discouraging as unemployment claims were higher than expected for the past two weeks.

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