US stocks rally

Wall Street rallied on a burst of optimism today as the multibillion-dollar buyout of HCA and upbeat earnings from drug manufacturers eased anxiety about an economic slowdown. The Dow Jones industrial average soared more than 180 points.

Acquisitions led the day’s headlines, with three equity firms agreeing to take hospital operator HCA private for 21.3 billion of cash and the assumption of 11.7 billion in debt, marking the largest leveraged buyout.

Advanced Micro Devices also acquired ATI Technologies for 5.4 billion.

The acquisition news relieved investors concerned about a weakening economy. Corporate buyouts typically signal optimism over economic growth; a profit warning from Dell late last week dimmed the near-term outlook and dragged the Nasdaq composite index to a 14-month low.

“The fact that merger and acquisition activity is strong in the US and abroad is a good indication that while the economy is expected to slow, perhaps the worry of a hard landing is overstated,” said Peter Cardillo, chief strategist at SW Bach & Co. He added that lower gold prices and gains for the dollar also boosted stocks.

Solid earnings from drugmakers contributed momentum. Dow Jones industrial Merck said its second-quarter earnings more than doubled to top Wall Street estimates, while Schering-Plough swung to a profit and also beat expectations.

The Dow surged 182.67 points, or 1.68%, to close at 11,051.05.

Broader stock indicators were also higher. The Standard & Poor’s 500 index added 20.62, or 1.66%, to close at 1,260.91, and the Nasdaq jumped 41.45, or 2.05%, to 2,061.84.