Stocks edged higher as the market continues to react to a series of M&A headlines, including a major deal in the candy industry and the passing of a deadline in the battle between tech giants Microsoft and Yahoo. 

Today’s Market

As of 1:39 p.m. EST, the Dow Jones Industrial Average rose 40.06 points, or 0.31% to 12930.86, the Standard & Poor’s 500 index gained 3.69 points, or 0.26% to 1401.46 and the Nasdaq Composite Index picked up 11.52 points, or 0.48%, to 2434.44. The consumer-friendly Fox 50 rose 3.56 points, or 0.36%, to 996.55.

Wall Street will look to build on last week’s slight gains, which helped bring the blue-chip index to its highest level since Jan. 15. The Dow rose for three of the past four weeks even though corporate earnings have declined and economic headlines remain gloomy. Traders appear to be betting the worst is over in the credit mess and that the economy will recovery quickly during the second half of 2008.

In recent trading, General Motors (GM) led the advancers with a 4.5% jump on news that a United Auto Workers deadline for a strike was extended. On the other hand, Microsoft (MSFT) tumbled 2% as anxiety grows over its proposed bid for Yahoo! (YHOO). Volume on the New York Stock Exchange was very low with the market on pace for less than 1 billion shares exchanging hands on the day.

Verizon (VZ) rose 3.2% after it met Wall Street’s expectations with its a first-quarter adjusted profit of 61 cents per share on revenue of $23.83 billion. The telecom giant and Dow member was the biggest name reporting results on Monday morning.

After the closing bell credit card company and newly listed New York Stock Exchange member Visa (V) will head to the earnings stage. Analysts expect Visa will report earnings of 55 cents a share, according to Thomson Reuters. Demand has been strong for Visa as evidenced by the company’s stock price jumping 20% since its debut. Wall Street will be watching for signs that the slowing economy and other pressures have hurt consumers’ ability to pay off their credit card debt.

The talk of Wall Street on Monday morning was all about the new merger deals and the ones that now look less certain. Billionaire investor Warren Buffett teamed up with privately-held Mars to acquire Wm. Wrigley Jr. (WWY) for $23 billion. The "sweet" deal marries two of the biggest names in the candy world and represents a 28% premium on Wrigley’s closing price on Friday. Shares of Wrigley soared 23% Monday. 

The merger is huge both financially and historically. Chicago-based Wrigley has been around for 117 years, and is not only known for its Double Mint and Juicy Fruit gum brands, but also for its namesake stadium in Chicago that is home to the Chicago Cubs. Mars is also an iconic brand, creator of such candy as M&M's and Snickers.

Wall Street is hoping the wheeling and dealing won't end there as it has implications for the health of the broader economy. “That’s good news. We haven’t had news on M&A for a long time now all due to the fears of the economy and the credit crunch. If we begin to see an increase in mergers and acquisitions it’s a good indication that the credit woes are beginning to subside," said Peter Cardillo, chief market economist at Avalon Partners.

On the other hand of the M&A spectrum, Yahoo’s (YHOO) deadline to enter friendly talks with Microsoft (MSFT) passed without a deal being reached. Microsoft Chief Executive Steve Ballmer had said if Yahoo didn’t take a seat at the bargaining table by Saturday then he would launch a hostile takeover bid and possibly even lower his initial offer price, which Yahoo said “significantly undervalues” the company. Even though no moves were announced as of yet, experts expect Microsoft to launch a hostile effort rather than back down and allow Yahoo to remain independent.

Also, Continental Airlines (CAL) said this weekend it is no longer interested in merging with a rival -- widely reported as being United Airlines parent company UAL Corp. (UAUA). Continental Chief Executive Officer Larry Kellner said Continental has "significant cultural, operational and financial strengths" that "would be placed at risk in a merger with another carrier in today's environment," in a memo to employees, according to the Journal.

Late Monday morning, the Associated Press reported United Airlines is in "very advanced" talks with US Airways (LCC) over a merger. The news agency cited an anonymous source in the report. 

This busy week will be highlighted by a decision on interest rates from the Federal Reserve on Wednesday. The central bank is expected to reduce rates once again, but this time by a more modest 0.25%. As usual, Wall Street will carefully review the Fed's accompanying statement, looking for clues about potential future rate cuts. 

"The verbiage is going to be more important. Everyone will look to see if they will put an end to [the rate cuts] and then hopefully the dollar will improve," said Frank Davis, director of sales and trading at Lek Securities.

“If they do hold the line here I think it will enhance the prospects of the economy turning around in the second half of the year. I think that’s what the market is really looking for," said Cardillo. 

Meanwhile, oil prices remain near record territory after nearly touching $120 a barrel over the weekend. Oil futures jumped after BP (BP) shut a major oil pipeline in the North Sea. In recent trading, oil rose 42 cents to $118.94 a barrel, while gold gained $5.50 to $895.60 an ounce.

Corporate Movers

Ford (F) jumped 11.9% after billionaire Kirk Kerkorian revealed his intent to up his stake in the auto maker by 20 million shares at a price of $8.50 per share -- a 13% premium to Ford's closing price on Friday. The move was seen as a sign of approval by many shareholders to Ford Chief Executive Alan Mulally's turnaround effort. 

IAC/InterActiveCorp (IACI) is again moving to divide his Internet company into five separate businesses, the New York Post reported on Monday. The newspaper reported IAC’s board will discuss the matter for the first time since Chief Executive Barry Diller successfully fended off a battle for control of IAC with Liberty Media Chairman John Malone. The Post reported IAC would create four separate entities: HSN home-shipping network, Ticketmaster, Interval International and LendingTree. However, IAC would reportedly hold assets like Ask.com and Match.com.

News Corp.’s (NWS) The Wall Street Journal reported an increase in paid subscriptions at a time when many newspapers’ circulations are tumbling. Over the past six months the Journal’s circulation rose 0.3% to 2.1 million subscribers and the total individually paid subscriptions increased 1.6% to 1.35 million. The online business did even better, reporting an 11% jump in paid subscriptions to the newspaper’s Web site. News Corp. is the parent company of the FOX Business Network.

Tyson Foods (TSN), one of the world's top chicken suppliers, said it lost 2 cents a share this quarter, compared with a profit of 19 cents a share from a year ago. The chicken company said the increased costs for things like grain and corn substantially ate into the company's profit margin. Analysts were expecting a profit of 1 cent a share. 

Sysco (SYY) soared 8.9% after it reported a $240.9 million profit, or 40 cents a share. The results are up from $221 million, or 35 cents a share, a year earlier. Analysts polled by Thomson Reuters had expected earnings of 39 cents a share on revenue of $9.21 billion.

World Markets

The Dow Jones Euro 50, the 50 largest companies of Europe, gained 20.37 points, or 0.54%, to 3814.76. The FTSE 100, London's benchmark index, fell 1.00 point, or 0.02%, to 6090.40. 

France's CAC 40 Index picked up 34.54 points, or 0.69%, to 5012.75 and Germany's DAX jumped 28.75 , or 0.42%, to 6925.33. 

Japan's Nikkei 225 Index gained 30.90 points, or 0.22%, to 13894.37. Hong Kong's Hang Seng Index fell 149.51 points, or 0.59%, to 25666.29.