NEW YORK - Financial companies led stock indexes to new two-year highs Tuesday after another big banking deal raised hopes that more acquisitions could be on the way.

Toronto-Dominion Bank said it is buying Chrysler Financial, the automaker's old lending arm, from Cerberus Capital Management L.P. for $6.3 billion. It was the latest example of a relatively healthy Canadian bank buying a U.S. lender battered by the financial crisis. Toronto-Dominion bought Commerce Bancorp Inc. in 2008, and just four days ago Bank of Montreal said it would buy Milwaukee-based bank Marshall & Ilsley Corp. for $4.1 billion.

The S&P 500 closed above the level it reached on Sept. 12, 2008, the last trading day before the collapse of Lehman Brothers at the height of the financial crisis. The Dow Jones industrial average is at its highest since Aug. 29, 2008.

Corporate mergers have picked up strongly this year. That, along with signs of an improving economy and a tax-cut package passed last week, have helped drive stocks up. The S&P 500 has jumped 6.3 percent this month and 12.5 percent this year.

Investors like to see an increase in deals because it shows that companies are becoming more confident in the economy. It also leads investors to hunt for companies that might become targets for buyers.

Research firm Dealogic reported Tuesday that the total dollar amount of corporate deals has jumped 18 percent to $2.7 trillion so far this year compared with all of 2009. Caterpillar Inc., Chevron Corp., and Google Inc. have also made significant deals in 2010.

The Dow rose 55.03, or 0.5 percent, to close at 11,533.16. The Dow is up 4.8 percent so far this month.

The S&P 500 index rose 7.52, or 0.6 percent, to close at 1,254.60. The Nasdaq composite rose 18.05, or 0.7 percent, to 2,667.61.

Financial companies were the best performers. JPMorgan Chase & Co. rose the most among the 30 companies that make up the Dow. The stock rose 2.6 percent to $41. Bank of America Corp., Goldman Sachs Group Inc., and Wells Fargo Corp. all rose by more than 1 percent.

Adobe Systems Inc. jumped 6 percent to $30.93 after the software maker reported earnings that were much stronger than analysts had expected. The company also raised its forecast for earnings and revenue in the current quarter.

Another technology company, Jabil Circuit Inc., soared 10.7 percent to $19.55 after its income more than tripled on stronger revenue. Jabil, which makes parts for electronics and other technology companies, also issued a higher earnings and revenue forecast.

CarMax Inc. slumped 7.6 percent to $33.17. The used-car dealership chain said its expenses jumped 14 percent last quarter as the company paid more for sales commissions and advertising.

More than two stocks rose for every one that fell on the New York Stock Exchange. Trading volume was 809 million shares.