NEW YORK — Financial companies led stock indexes to new two-year highs Tuesday after another big banking deal raised hopes that more acquisitions could be on the way.
Toronto-Dominion Bank said it is buying Chrysler Financial, the automaker’s old lending arm, from Cerberus Capital Management LP for $6.3 billion.
The S&P 500 closed above the level it reached Sept. 12, 2008, the last trading day before the collapse of Lehman Brothers at the height of the financial crisis. The Dow Jones industrial average is at its highest since Aug. 29, 2008.
Corporate mergers have picked up strongly this year. That, along with signs of an improving economy and a tax-cut package passed last week, have helped drive stocks up. The S&P 500 has jumped 6.3 percent this month and 12.5 percent this year.
Investors like to see an increase in deals because it shows that companies are becoming more confident in the economy. It also leads investors to hunt for companies that might become targets for buyers.
Research firm Dealogic reported Tuesday that the total dollar amount of corporate deals has jumped 18 percent to $2.7 trillion so far this year compared with all of 2009. Caterpillar Inc., Chevron Corp. and Google Inc. also have made significant deals in 2010.
“There is growing optimism about the economy, or at least the U.S. economy, in 2011,” said Alan Gayle, senior investment strategist for RidgeWorth Investments. “We’re 18 months into this recovery, and good things are gradually happening.”
The Dow rose 55.03, or 0.5 percent, to close at 11,533.16. The Dow is up 4.8 percent so far this month.
The S&P 500 index rose 7.52 to close at 1,254.60. The Nasdaq composite rose 18.05 to 2,667.61.
JPMorgan Chase & Co. rose the most among the 30 firms making up the Dow. The stock climbed 2.6 percent to $41.
