NEW YORK (MarketWatch) -- U.S. stocks advanced slightly on Monday, with the market cheering a buyout of William Wrigley Jr. Co. by privately held Mars and Warren Buffett's Berkshire Hathaway.
Gains remained capped, however, with investors cautiously looking ahead to a two-day meeting by the Federal Reserve, where the central bank is expected to signal it may not be cutting interest rates for much longer.
"All eyes are trained on the Fed's policy statement on Wednesday to see how strongly it hints at a pause in the easing cycle after an expected 25 basis-point rate cut to 2.0%," said Sal Guatieri, economist at BMO Capital Markets.
Economic data, meanwhile, may reveal that the U.S. economy is in a recession. On Wednesday, first-quarter gross production data may reveal the economy already has contracted. On Friday, investors expect jobs data to reveal another big drop in payrolls in April.
Offsetting early selling pressure, shares of Wrigley jumped 23% to $76.75 lifting the consumer-discretionary sector and the broader market. Privately held Mars and Warren Buffett's Berkshire Hathaway said they would buy the chewing-gum maker for about $23 billion, or $80 a share.
The Dow Jones Industrial Average was up 9 points at 12,900, with 17 of its 30 components rising, led by shares of Verizon Communications Inc. , Merck & Co. and General Motors Corp.
Shares of GM rival Ford Motor Co. gained 9%, after Kirk Kerkorian's Tracinda announced it planned to offer $8.50 per share for up to 20 million of its shares.
The S&P 500 Index was up 1.2 points, or 0.1%, to 1,399, while the Nasdaq Composite Index rose 3.3 points, or 0.1%, to 2,426.
Crude futures finished slightly higher, gaining 23 cents to $119.90 a barrel, after earlier hitting a new high of $119.93 a barrel, boosted by a refinery strike in the United Kingdom and violence in Nigeria. The energy sector of the S&P 500, however, gave up its early gains.
On the earnings front, Dow component Verizon rose 2.7% after reporting a 10% profit rise, helped by the performance at the Verizon Wireless unit, for which it holds a 55% stake. Vodafone Group owns the rest of the mobile operator that signed up 1.5 million customers during the most recent quarter.
On Friday, stocks finished mostly higher, with the Dow rising 42 points and the S&P 500 up 9 points. Microsoft's cautious outlook dragged the Nasdaq down about 6 points.
Attention turns this week to the Federal Reserve, days away from a possible quarter-percentage point rate cut.
Two-thirds of respondents to a money manager poll from Ried Thunberg Icap think the FOMC will signal a pause in rate cuts is likely after making a quarter-point cut Wednesday.
In other news, Continental Airlines Inc. fell 1.6% after saying it has no plans to merge with another airline, apparently scuttling rumors of a possible deal with United Airlines parent UAL Corp. Both Continental and UAL shares dropped more than 5% in premarket trade.
UAL is continuing merger discussions with US Airways Group , The Wall Street Journal reported.
The three-week deadline that Microsoft Corp. gave Yahoo Inc. to come to an agreement on its unsolicited bid for the Web portal passed without any announcement from either side, leading to the possibility that the battle for Yahoo is about to turn hostile. Shares of Yahoo rose 0.2%, while Microsoft fell more than 2%.
By Nick Godt