NEW YORK - Another wave of corporate dealmaking stoked investors' confidence in the economy and carried stocks sharply higher yesterday.

Analyst upgrades of Alcoa Inc. and Intel Corp. and positive momentum on President Obama's health-care overhaul also helped drive a broad advance on the stock market. Major indexes closed off their highs of the day but still rose about 1 percent. The Dow Jones industrial average jumped into the black for the month.

Bond prices tumbled as stocks rose, pushing the yield on the benchmark 10-year Treasury note up to its highest level since August. The dollar strengthened, hurting commodities prices.

Stocks got an early boost yesterday after French drug maker Sanofi-Aventis SA announced plans to buy U.S. health-care products company Chattem Inc. for $1.9 billion, while mining equipment maker Bucyrus International Inc. said it planned to buy Terex Corp.'s mining equipment division for $1.3 billion. Dutch automaker Spyker Cars submitted a new offer to buy Saab from General Motors Co.

Robert Pavlik, chief market strategist at Banyan Partners, said the flurry of corporate deal activity was an encouraging sign of strength in the economy.

In other corporate news, aluminum maker Alcoa Inc. announced an $11 billion joint venture in Saudi Arabia. The deal, along with an analyst's upgrade of the stock, drove Alcoa shares up nearly 8 percent, making it the best performer among the 30 stocks that make up the Dow.

An upgrade of chip maker Intel Corp. helped boost technology stocks, while health care stocks rose broadly as a historic health bill moved closer to passage in the Senate.

The Dow rose 85.25, or 0.8 percent, to 10,414.14, after rising as much as 129 points earlier in the day. The Standard & Poor's 500 index rose 11.58, or 1.1 percent, to 1,114.05, while the Nasdaq composite index rose 25.97, or 1.2 percent, at 2,237.66.

Yesterday's surge in stocks lifted the Dow into positive territory for the month, giving it a 0.7 percent gain.

Historically, December is the best single month for stocks, with the S&P 500 index averaging a 1.6 percent gain. So long as economic and corporate news continues to be encouraging, analysts expect the market to keep its momentum going into the new year.

Among the standout stocks, Chattem surged more than 33 percent, adding $23.16 to close at $93.14 after Sanofi-Aventis offered $93.50 a share for the company. Chattem, which is traded on the Nasdaq, helped lift that index to an intraday high for the year.

Alcoa shares shot up 7.9 percent after the announcement of the Saudi deal and Morgan Stanley's upgrade of the stock based on a forecast of higher aluminum prices. Shares jumped $1.15 to $15.73.