NEW YORK, Oct 6 (Reuters) - U.S. stocks rose on Monday, extending a rally from the previous session as investors grew more confident in the economy's strength and Federal Reserve policy.
Merger activity and corporate restructuring also boosted equities, with the S&P 500 advancing above its 50-day moving average for the first time since Sept. 29, a sign that near-term momentum is improving.
Tech shares were among the strongest of the day after Hewlett-Packard Co said it would split into two public companies, sending shares up 4.2 percent to $36.68 on heavy volume.
Separately, Becton Dickinson & Co agreed to buy CareFusion Corp for $12.2 billion in cash and stock. Becton jumped 6.8 percent to $123.52 while CareFusion was up 23 percent to $56.96 as the S&P 500's biggest gainer.
The S&P 500 index had posted its best day since August on Friday, lifted by a stronger-than-expected jobs report that boosted optimism about the economy, while the Federal Reserve was not seen as speeding up its timeline for raising interest rates.
"The recovery is alive and well, and while there are still risks we need to keep an eye on, fundamentals suggest we're in pretty good shape and could continue to move higher," said John Carey, portfolio manager at Pioneer Investment Management in Boston.
Market volatility has been higher of late, with equities notching big swings amid unrest in Hong Kong and concerns about Ebola in the United States. Those issues could continue to drive trading. The CBOE Volatility index fell 1.6 percent to 14.32, well below its long-term average of 20.
The Dow Jones industrial average was rising 76.01 points, or 0.45 percent, to 17,085.7, the S&P 500 was gaining 8.18 points, or 0.42 percent, to 1,976.08 and the Nasdaq Composite was adding 13.42 points, or 0.3 percent, to 4,489.05.
Advancing issues were outnumbering declining ones on the NYSE by 2,066 to 674, for a 3.07-to-1 ratio on the upside; on the Nasdaq, 1,356 issues were rising and 899 falling for a 1.51-to-1 ratio favoring advancers.
The benchmark S&P 500 index was posting 15 new 52-week highs and no new lows; the Nasdaq Composite was recording 16 new highs and 21 new lows. (Editing by Nick Zieminski)