NEW YORK — Wall Street soared yesterday on the first day of trading for the third quarter, boosted by a decline in Treasury yields, a rise in June manufacturing activity and a spate of buyout news.

The Dow Jones Industrial Average rose 126.81, or 0.95 percent, to 13,535.43.

Broader stock indicators also rose. The Standard & Poor’s 500 index gained 16.08, or 1.07 percent, to 1,519.43, and the Nasdaq composite index jumped 29.07, or 1.12 percent, to 2,632.30.

Rhode Island impact stocks rose, led by Textron and MetLife. The Bloomberg Rhode Island Index, a price-weighted list of companies with operations in the region, rose 5.88 to 305.42. Textron rose $3.39 to $113.50. MetLife rose $1.10 to $65.58.

The Dow gained after the Institute for Supply Management’s June manufacturing index came in at 56.0, slightly higher than the market predicted and indicating stronger expansion than May’s reading of 55.0. The report also showed a decrease in its prices paid index, suggesting inflation pressures lifted a bit last month and easing some of the market’s worries about the Federal Reserve’s interest rate policy.

Meanwhile, the 10-year Treasury note’s yield fell below 5 percent from 5.03 percent late Friday, dampened as investors flocked to the safe-haven assets amid ongoing jitters about subprime lending. In mid-June, Bear Stearns & Cos. had to bail out a hedge fund with investments tied to subprime mortgages.

Investors were also enthusiastic about new takeover activity, involving such targets as Canadian telecommunications company BCE, rural wireless provider Dobson Communications Corp. and British telecommunications company Virgin Media.

“There’s favorable economic news and continuing merger talk. That’s a pretty good recipe for the market,” said Stuart Schweitzer, managing director and global markets strategist for JPMorgan Private Bank. He added, though, that the market has been seesawing in recent weeks and trading volumes are light, so the market’s gain should not be interpreted as a turnaround just yet.

“I think the movie’s going to end well this year, but there are still going to be some scenes where we’ll have to take our eyes away from the screen,” Schweitzer said, pointing to persistent sluggishness in the housing market and nervousness over credit problems.

The combination of retreating yields and reports of fresh buyout activity gave some relief to investors who were worried about business slowing down due to high rates.

“There’s a little positive to the subprime woes, that being that interest rates are dropping now,” said Steven Goldman, chief market strategist at Weeden & Co. in Greenwich, Conn. The 10-year Treasury note’s yield breached the 5 percent level in early June for the first time since last year, hit a peak of nearly 5.30 percent, and have since retreated. High rates can hamper deal-making.

BCE rose $1.66, or 4.4 percent, to $39.45 after a $32.6-billion buyout offer over the weekend — the biggest Canadian takeover ever — from a consortium led by the Ontario Teachers Pension Plan Board and including Providence-based Providence Equity Partners.

The news followed AT&T’s announcement Friday that it agreed to buy Dobson for $2.8 billion. Dobson rose $1.31, or 11.8 percent, to $12.42 yesterday, while AT&T rose 35 cents to $41.85.

Yesterday, Virgin Media confirmed it received a buyout offer, following reports that private equity firm the Carlyle Group bid more than $11 billion for the company. Virgin Media soared $4.30, or 17.6 percent, to $28.67.

Carlyle approached Hook, England-based Virgin Media about a possible takeover bid, said two people with knowledge of the discussions. Goldman Sachs will consider the bid as part of a wider review of options, Virgin Media said in a statement.

The bid comes almost a year after a group led by Providence Equity Partners attempted to buy the company, then known as NTL Inc., for more than $8 billion. That group may now make a rival offer, the people said. Billionaire Richard Branson’s Virgin Group owns about 6.5 percent of Virgin Media, which faces growing competition from BT Group PLC and Rupert Murdoch’s British Sky Broadcasting Group PLC.

“With Virgin Media there is no growth story,” said David Thomson, an analyst at Bryan Garnier & Co. in London. Private equity firms would be interested in making “functional improvements in the operations. The cash-flow is reasonable.”

Carlyle, a Washington-based buyout firm, made an indicative offer of about $33 a share, one of the people said. The people declined to be identified because the bidding process is supposed to be secret. The bid is 35 percent above the closing price of Virgin Media stock on June 29.

Emma Thorpe, a spokeswoman for Carlyle in London, declined to comment yesterday. Carlyle’s bid was reported by the London-based Times newspaper June 30.

The Carlyle Group also made an offer for nursing home chain Manor Care, valued at $4.9 billion. Manor Care slipped $1.19 to $64.10.

Investors appeared unfazed yesterday by high oil prices. Crude oil futures on the New York Mercantile Exchange initially fell, but then rebounded to rise 41 cents to $71.09 a barrel — closing above $71 for the first time in 10 months.

The dollar fell against most other major currencies, while gold prices rose.

Advancing issues outnumbered decliners by about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 2.50 billion shares, down from 3.10 billion shares Friday.

Trading volumes are low ahead of the Independence Day holiday tomorrow, when U.S. stock exchanges will be closed. The markets are also closing early today.

Two big pieces of data this week include the ISM’s index of the service sector in June, to be released Thursday, and the Labor Department’s jobs report, scheduled to come out Friday.

The Russell 2000 index of smaller companies rose 11.36, or 1.36 percent, to 845.06.

Overseas, Japan’s Nikkei stock average rose 0.04 percent. Britain’s FTSE 100 fell 0.26 percent, Germany’s DAX index declined 0.61 percent, and France’s CAC-40 lost 0.46 percent.