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M&A News, Earnings Optimism Lift Stocks; Paycom Jumps

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A busy day of headlines and optimism about corporate earnings Monday sparked a nice rally in the Nasdaq composite in afternoon trading. Gains in the Dow and S&P 500 were more muted, hurt in part by another drop in oil prices.

AT&T (T) and Time Warner (TWX) got most of the attention after AT&T struck a deal to acquire Time Warner for $105.4 billion, valuing Time Warner at around 107.50 a share.

AT&T fell nearly 2%, while Time Warner lost 2.5% to 87.26. Last week, Time Warner jumped 12.5% as news of a potential deal surfaced.

The Nasdaq was up 0.9%, while the Dow and S&P 500 added 0.4%. Volume on the NYSE and Nasdaq was tracking lower than Friday's levels.

Semiconductor stocks outperformed, while miners and oil/gas names lagged. Benchmark crude oil lost 2% to $49.76 a barrel after Iraq said it should be exempt from planned output cuts.

In the stock market today, Amazon.com (AMZN) rose nearly 2%, helped by a lifted price target by Goldman Sachs to to 1050 from 920. Goldman also reiterated its "conviction buy" rating.


IBD'S TAKE: Amazon's recent alliance with VMware (VMW) shows it's serious about Amazon Web Services, its fast-growing cloud services business.


Inside the IBD 50, Paycom Software (PAYC) jumped 4.4% to 52.17 in heavy volume as it works on a flat base with a conventional entry at 53.03.

New Oriental Education (EDU) was another top gainer in the IBD 50, rising 3% to 48.24. It's flirting with a breakout over a 48.51 buy point ahead of its earnings report Tuesday before the open.

Another software name, RealPage (RP), jumped nearly 4% to 27. It cleared a flat base with a 26.54 entry.

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