Lifted by Deal-Making, Wall Street Closes Slightly Higher

The stock market closed slightly higher on Monday, as a series of deals increased investors' enthusiasm for stocks, though Wall Street's fear gauge also rose modestly.

The Dow Jones industrial average and the Standard & Poor's 500-stock index once again reached nominal record highs, although just barely.

The Dow rose 18.82 points or 0.11 percent, to close at 16,943.10, according to preliminary figures. The S.&P. 500 gained 1.83 points or 0.09 percent, to 1,951.27. The Nasdaq composite index added 14.84 points or 0.34 percent, to 4,336.24.

This is the 11th rise of the S.&P. 500 in the last 13 trading sessions, and its seventh record close of the past eight trading days.

Wall Street's fear gauge, the CBOE volatility index, also know as the VIX, rose 3 percent to 11.05 following its drop on Friday to its lowest level since February 2007.

There's "still skepticism about this rally, so consequently, we're not in an overbought position here," said Bucky Hellwig, senior vice president of BB&T Wealth Management.

While Wall Street's upward trend looks intact, traders may need new catalysts to maintain momentum in the market.

Merger activity gave investors a reason to buy some stocks on Monday.

Merck & Company agreed to buy Idenix Pharmaceuticals in a deal valued at about $3.85 billion, while Analog Devices said it would buy Hittite Microwave in a deal valued at $2 billion.

Shares of Idenix more than tripled, surging 229 percent to $23.79 on heavy volume, while Hittite shot up 28.6 percent to $77.90. Merck, a Dow component, was flat at $57.94. Analog gained 5 percent to $55.31.

Tyson Foods fell 6.5 percent to $37.50 after prevailed over Pilgrim's Pride in the bidding war for Hillshire Brands. Hillshire gained 5.3 percent to $62.06.

Market participants will continue to watch the CBOE volatility index. The VIX is almost half of its historical average, which some analysts worry is a signal that the market is not fully accounting for issues that could derail the rally.

"I don't think you can argue that the market is stretched. There's room for the economy to grow, and while the VIX may suggest some complacency, I don't see the kind of euphoria that would indicate over-optimism about stocks," said Rex Macey, who helps oversee $20 billion in assets as chief investment officer at Wilmington Trust. "I would be careful about pulling back on stocks too soon."

Apple Inc. was the Nasdaq's most active name, rising 1.5 percent to $93.70 in heavy volume in the tech titan's first trading session after a seven-for-one stock split.

Family Dollar Stores jumped 13.4 percent $68.62 in heavy trading after the hedge fund billionaire Carl C. Icahn late Friday reported a 9.39 percent stake in the company, making him the discount retailer's largest shareholder. The company said on Monday that it had adopted a poison pill in response.

Time, which is being spun off from its parent Time Warner, began trading on the New York Stock Exchange on Monday. Its shares slipped 0.8 2.9 percent to $23.30, while Time Warner shares rose 1.2 percent to $68.99.

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