Stocks rose for a third straight session as corporate mergers and bargain prices lured investors back to a market that is again inching toward record heights.

The Dow Jones industrial average rose 109.54 points to close at 10,909.38.

Broader stock indicators also closed higher. The Standard & Poor's 500-stock index rose 6.77, to 1334.52, and the Nasdaq composite rose 45.87, to 2524.21, as technology leaders and upstart Internet companies had solid gains.

Trading got a boost from the announcement of several mergers, particularly a $14.82 billion deal between AlliedSignal and Honeywell that creates an aerospace parts-and-electronics conglomerate. AlliedSignal rose 4-7/16, to 62-13/16, and Honeywell gained 7, to 112, as investors applauded the cost savings expected from the merger.

First Security Corp. rose 5 3/4, to 24 3/8, after agreeing to merge with Salt Lake City rival Zions Bancorp in a deal worth $5.9 billion. Zions fell 6-25/32, to 58-19/32.

The broad base of good corporate news heartened Wall Street.

"It's one of those sessions where all is right with the world," said Ned Collins, a trader at Daiwa Securities America.

With today's gains, the Dow is less than 200 points, or about 1.8 percent, short of its May 13 record level of 11,107.19. The index slid to a close of 10,466.93 on May 27 before beginning its ascent.

The Nasdaq, which had dipped as much as 10 percent below its April 26 record of 2652.05, is now just 4.8 percent short of that mark. The technology-heavy index was as low as 2380.90 on May 25.

But the gradual rally has not lifted all stocks, and analysts still fret over the lack of a consistent leading sector.

Volume remained light as traders already began looking ahead to Friday, when the government's producer price index is expected to offer signals about inflation and perhaps an indication of whether the Federal Reserve will raise interest rates to keep the economy from overheating.

Advancing issues outnumbered declining ones by 7 to 5 on the New York Stock Exchange Monday, where volume totaled 664.3 million shares, down from 694.6 million on Friday.

The NYSE composite index rose 2.42, to 636.94; the American Stock Exchange composite index fell 2.83, to 778.15; and the Russell 2000 index of smaller companies rose 4.32, to 446.65.