New York ? Stocks made a strong move higher Monday as a new spate of merger activity and a surprising rise in home sales restored investors’ confidence in the economy and eased fears of inflation and higher interest rates.

The news of Valero Energy Corp.’s $6.9 billion takeover of oil refiner Premcor Inc. — creating the largest oil refiner in North America — reassured investors that corporate America still was willing to make large deals despite economic uncertainty.

A climb in home sales also lifted investors’ spirits.

“The housing sales report was big because there were a number of signs that the economy might be weakening, and this disputes that,” said Ken Tower, chief market strategist for Schwab’s CyberTrader.

The Dow Jones industrial average rose 84.76, or 0.83 percent, to 10,242.47. Broader stock indicators also moved sharply higher.