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Stocks Start Week Upbeat

Updated from 4:14 p.m. EDT

Stocks started the week with gains Monday as a deluge of corporate deal making ultimately proved powerful enough to distract the bulls from the looming Federal Reserve rate meeting.

The Dow Jones Industrial Average rose 56.19 points, or 0.51%, to 11,045.28. The S&P 500 was up 6.06 points, or 0.49%, at 1250.56, and the Nasdaq Composite was higher by 12.20 points, or 0.58%, to 2133.67. The 10-year Treasury bond was down 2/32 in price to yield 5.24%, while the dollar fell against the yen and euro.

The Dow's rise was aided by gains of 1.6% in General Motors (GM), Walt Disney (DIS) and Pfizer (PFE).

Volume was meager to start the week. About 1.34 billion shares changed hands on the New York Stock Exchange, with advancers outpacing decliners by a 5-to-3 margin. Volume on the Nasdaq was about 1.41 billion shares, and advancers beat decliners 3 to 2.

"Despite the huge surge in M&A activity, the market is off to a lackluster start for the week," said Michael Sheldon, chief market strategist with Spencer Clarke LLC. "Many investors are likely to be on the sidelines ahead of the Fed meeting."

Monday's corporate headlines were dominated by merger news, including a $40 billion transaction in which Phelps Dodge (PD) will merge with Canadian miners Inco (N) and Falconbridge (FAL). The agreement will create one of the world's largest producers of nickel and copper.

Phelps Dodge dropped $6.72, or 8.1%, to $76.23, but Inco surged $5.95, or 10.2%, to $64.21. Falconbridge was higher by $2.50, or 5.1%, to close at $51.80.

Elsewhere, Johnson & Johnson (JNJ) confirmed an agreement to acquire the consumer healthcare operations of Pfizer for $16.6 billion, while Dutch steel giant Mittal (MT) closed a deal to acquire Arcelor for about $34 billion.

J&J fell $1.11, or 1.8%, to $60.21, and Pfizer was higher by 37 cents, or 1.6%, to $23.01. Mittal Steel gave up 77 cents, or 2.4%, to finish at $31.40.

Peter Cardillo, chief market strategist with S.W. Bach & Co, said that M&A activity supported the market, but "the big story remains the Federal Reserve meeting later this week, so we should still see a range-bound market. There isn't too much exciting news out there as the quarter comes to an end this week."

To view Gregg Greenberg's video take on today's market, click here

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