Updated from 1:24 p.m. EDT
New York's major averages edged modestly higher Monday as investors awaited the upcoming
gathering and digested a batch of merger news and positive earnings reports.
Dow Jones Industrial Average
traded on both sides of the flat line before recently rising 34 points to 12,926 as components
booked particularly strong gains. The
rose 4 points to 1402, and the
gained 12 points to 2434.
Alan Gayle, senior investment strategist with RidgeWorth Capital Management, said, "My guess is that a lot of investors don't want to make big calls in front of a Fed meeting and all the other data that's coming out."
The Fed will begin its two-day meeting Tuesday, and it is widely expected to cut the fed funds target rate by 25 basis points. Many analysts also believe the central bank will signal a pause in its months-long easing cycle, which since September has taken the overnight lending rate down three percentage points to 2.25%.
Gayle also pointed out that this week we will see nationwide manufacturing data from the Institute for Supply Management and the Labor Department's monthly unemployment report. "The market's had a positive couple of weeks," he said, "and right now this week's calendar is either going to reinforce that or it's going to challenge it. So far it looks like not too many money managers want to step out in front of that."
Regarding the afternoon uptick, Fred Dickson, senior vice president and market strategist with D.A. Davidson, said the pickup in merger activity could reflect a generally uplifted mood.
Dickson added: "I think there's a general feeling that, while the credit crisis hasn't entirely passed, the front wall of the hurricane has passed." He cited the recent stabilization of triple-A-rated subprime mortgage credit swaps, as well as an earnings season that so far hasn't been quite as calamitous as many had feared.
As for the M&A news,
today shot up 23.3% to $76.97 after Mars and Warren Buffett's
said they would acquire the chewing-gum outfit for roughly $23 billion, or $80 a share.
Wrigley also beat analysts' first-quarter expectations with earnings that surged 18.1% to $168.6 million, or 61 cents a share.
, meanwhile, climbed 4.4% on the hope that the chocolatier would seek a similarly generous bid. Britain's
, which has discussed a potential merger with Hershey several times in the past, bumped up 3% on the
New York Stock Exchange
was also advancing on word that Kirk Kerkorian's Tracinda has collected a 4.7% stake in the automaker, or about 100 million shares, and plans to offer $8.50 each for an additional 20 million shares. Ford spiked 10.7% to $8.30, and the Dow's GM added 5.1%.
Also, reports surfaced this morning that United Airlines parent
is in "very advanced" talks to merge with
said a merger announcement should come within two weeks. UAL shares slumped 1.8%; U.S. Airways soared 16.6%.
The news came just as United said it would abandon talks with
, which said this weekend it would
. Continental stock lost 0.8%.
Elsewhere, Dow component Verizon posted
, lifting shares by 3.5%. Separately, health insurer
padded its full-year earnings guidance as first-quarter income jumped 12.5% and topped the average Wall Street consensus. Shares were up 2.4% at $45.95.
On the losing side, conglomerate
reported that consolidated earnings -- which includes results from cigarette subsidiary
-- slid 13.8% to $662 million. Both companies, by themselves, saw earnings declines from last year. Loews lost 3.8% as Carolina gave up 5.5%.
Back in merger news, the deadline for
to respond to
takeover bid passed without any comment from either company. Shares of Microsoft shed 2.3%, while Yahoo! rose 0.5% at $26.92.
Traders were also dealing with another new high for crude oil, which reached $119.93 a barrel before pulling back to a 43-cent gain at $118.95. Gold ratcheted up $5.80 to $895.50 an ounce.
The U.S. dollar was slipping 0.3% against the euro at $1.5630 and fell 0.1% against the yen at 104.35.
That came as the European Union predicted that eurozone countries would see inflation spike to 3.2% this year, compared with 2.1% in 2007. The forecast could keep the European Central Bank from making cuts to its own benchmark lending rate, even as many of its member countries suffer economic slowdowns.
Treasury prices were creeping higher. The 10-year note and the 30-year bond each stepped up 7/32 in price, yielding 3.84% and 4.58%, respectively.
Markets overseas were mostly rising. The Nikkei 225 in Japan added 0.2% overnight, and the Hang Seng Index in Hong Kong climbed 0.6%. Among European bourses, London's FTSE 100 was ticking down, and Germany's Xetra Dax advanced 0.4%. The Paris Cac tacked on 0.7%.