New York ? Investors sent stocks sharply higher Tuesday as Cingular’s $41 billion bid for AT&T Wireless set an upbeat tone on Wall Street, and Disney rejected a hostile takeover proposal from Comcast but said it would consider other offers that fairly valued the company.

There also was encouraging economic news from the Federal Reserve, which reported a rebound in production at the nation’s factories, mines and utilities last month. The 0.8 percent rise in industrial production matched forecasts and was welcome following a flat reading in December.

The fairly aggressive bid for AT&T Wireless Services Inc., which many thought would sell for about $30 billion, sparked a good deal of optimism on the first trading day of a holiday-shortened week. Some hoped the deal would inspire more spending in the telecommunications sector.

“Seeing corporations pay a premium like this for companies could lead some investors to think maybe the market’s still a bit undervalued, so we’re seeing shares drift higher,” said Todd Clark, head of listed equity trading at Wells Fargo Securities.

The Dow Jones industrial average surged 87.03, or 0.8 percent, to close at 10,714.88, after a gain of 0.3 percent last week.