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Why Chesapeake Energy, Cavium, and Advanced Micro Devices Jumped Today

Monday was a generally positive day for the financial markets, with major benchmarks posting modest gains from last week's record levels. Merger and acquisition activity became the focus of investors' attention today thanks to a major deal in the technology sector, but other contributors to the market's strong performance included a lack of substantial bad news from President Trump's trip to Asia and signs of progress on the federal government's domestic policy agenda. Some stocks benefited strongly from the attitude on Wall Street, and Chesapeake Energy (NYSE: CHK), Cavium (NASDAQ: CAVM), and Advanced Micro Devices (NASDAQ: AMD) were among the best performers on the day. Below, we'll look more closely at these stocks to tell you why they did so well.

Chesapeake powers up

Shares of Chesapeake Energy climbed 12%, bouncing back from poor performance in the month of October. Many investors have been nervous about the energy giant, citing unhealthy levels of debt that could hamper the company's ability to react to a rising interest rate environment. Yet news over the weekend of a shake-up in the Saudi royal family sent crude oil prices to their highest levels of the year, and a healthier energy market could be just the ticket to help Chesapeake make the most of its opportunities. The oil and natural gas producer still has plenty of work ahead of it, but higher prices would make it a lot easier for the well-known industry player to make progress.

Image source: Getty Images.

Cavium could be a target

Cavium stock climbed 12% after reports surfaced that the semiconductor chip manufacturer might become the target of an acquisition bid. The Wall Street Journal reported that Cavium could be in talks with Marvell Technology Group (NASDAQ: MRVL), with a possible deal to be announced within the next several weeks. The combination would be highly complementary, with Marvell focusing on areas like data centers and wireless and network applications for which Cavium already produces highly integrated semiconductor products. A deal is far from certain, but with M&A activity picking up in the space, the move makes sense for both players.

AMD gets an unlikely partner

Finally, shares of Advanced Micro Devices climbed 7%. The maker of graphics processing chips and microprocessors said that it would work with archrival Intel (NASDAQ: INTC) to create a multichip processor package. Under the deal, AMD will supply a semi-custom Radeon graphics processor unit to go with an Intel Core processor and a specialized memory chip to compete in the high-performance graphics space. A collaboration between Intel and AMD would have once seemed unthinkable, but as NVIDIA takes greater control of the chip market, an aggressive response is warranted, especially given shareholders' concerns about Advanced Micro's ability to sustain recent growth rates.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nvidia. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.