NEW YORK (MarketWatch) -- U.S. stocks turned higher on Monday, with the market cheering a buyout of Wm. Wrigley Jr. 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 bps rate cut to 2.0%," said Sal Guatieri, economist at BMO Capital Markets.
Economic data, meanwhile, may reveal the U.S. economy is in recession. On Wednesday, first-quarter gross production data may reveal the economy has already contracted. On Friday, investors expect jobs data to reveal another bid drop in payrolls in April.
Offsetting early selling pressure, shares of Wm. Wrigley Jr. Co. jumped 22% to $76.68, lifting the consumer-discretionary sector and the broad 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 12 points at 12,904, with 18 of its 30 components rising, led by shares of Verizon Communications , Merck & Co. and General Motors Corp. .
Shares of GM rival Ford Motor Co. gained 9%, with Kirk Kerkorian's Tracinda said it is planning to offer $8.50 per share for up to 20 million of its shares.
The S&P 500 index was up 2.9 points, or 0.2%, at 1,400, while the Nasdaq Composite rose 6 points, or 0.2%, to 2,428.
Energy was also among the rising sectors, with crude oil futures up 0.3% at $118.91 after earlier hitting a new record high of $119.93 a barrel, boosted by a refinery strike in the UK and violence in Nigeria.
On the earnings front, Dow-component Verizon Communications rose 1.9% after reporting a 10% profit rise, helped by the performance at its 55%-held Verizon Wireless unit. 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 Composite down about 6 points.
Attention on Monday turned to the Federal Reserve, days away from a possible quarter-point rate cut.
Two-thirds of respondents to a money manager poll from Ried Thunberg Icap think the FOMC will imply a pause in rate cuts is likely after making a quarter-point cut on Wednesday.
Of stocks in focus, Continental Airlines said it has no plans to merge with another airline, apparently scuttling rumors of a possible hookup with United Airlines parent UAL Corp. . Continental shares dropped over 5% in pre-market trade, as did UAL.
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 Internet media company passed without any announcement from either side, leading to the possibility that the battle for Yahoo is about to turn hostile.
By Nick Godt