Dow Dances to Mergers' Song

Outside the metals mania, drugstore operator CVS(CVS Quote) boosted its offer price for Caremark(CMX Quote) as it tries to fend off a rival bid from Express Scripts(ESRX Quote). CVS fell 1.2% on the news, while Caremark jumped 3.2%.

Traders were unfazed by the widening trade deficit, which ballooned to $61.2 billion in December from $58.1 billion in November, according to the Commerce Department. Higher oil imports widened the gap.

Several economists noted that the wider deficit will shave off about a quarter-point from the government's initial estimate of 3.5% growth in fourth-quarter GDP, with some saying it will send growth below 3% for the period.

Bernanke in Softer Spotlight

Behind the screen of a rallying Dow, the deficit news brings back into focus Fed Chairman Ben Bernanke's testimony before the Senate Banking Committee Wednesday. The chairman will testify before the House Financial Services Committee on Thursday.

Last July, when Bernanke gave his second monetary policy report on Capitol Hill, the Dow rallied 210 points, even after Sen. Jim Bunning (R., Ky.) accused Bernanke of being incompetent and spurring stock market declines.

Most don't expect this week's testimony to have such an impact on the market. This time around, the chairman is a more of a known quantity, and the Fed and the markets are in sync, wholeheartedly believing the central bank will keep rates on pause until late in 2007.