Stocks pick up steam

NEW YORK (CNNMoney.com) -- Stocks rose Monday morning amid a flurry of corporate dealmaking, but investors remained cautious ahead of this week's Federal Reserve meeting.

The Dow Jones industrial average (up 31.88 to 12,339.37, Charts) and the broader Standard & Poor's 500 index (up 4.48 to 1,414.32, Charts) both added about 0.3 percent more than an hour into the session. The tech-fueled Nasdaq composite (up 13.75 to 2,451.11, Charts) gained 0.5 percent.

The Fed meets Tuesday, and investors widely expect policymakers to hold interest rates steady at 5.25 percent for a fourth straight meeting.

They're also eager to read the central bank's statement for clues about whether a rate cut may be coming soon.

The only economic report that was released was on wholesale inventories. The government said inventories at U.S. wholesalers rose more than expected in October, while sales fell.

While there were no major economic numbers to drive stocks, the market took in a wave of deal news.

Hedge fund SAC Capital is planning to fight the proposed buyout of mining company Phelps Dodge (Charts) by Freeport McMoRan Copper & Gold Inc., the New York Post said.

Airline reservation service Sabre Holdings (Charts), the owner of both Travelocity Web site and the computer reservation system used by travel agent and airlines, rose 7 percent after reports said it could be sold this week for a premium to its $3.75 billion market value.

Biomet (Charts) jumped 4 percent on news that Smith & Nephew (Charts), Europe's biggest medical device makers, is close to bidding $11 billion for it.

Casino operator Harrah's Entertainment (Charts) reportedly plans to meet Wednesday to consider all buyout offers presented to the gambling giant. Shares rose nearly 1 percent.

Other stocks on the move included biotech Nuvelo (up $0.01 to $10.42, Charts), which plunged 81 percent on the Nasdaq after it said its experimental drug for dissolving blood cots didn't meet its goal in late-stage studies.

On the 30-share Dow, 21 out of 30 components rose. Financials J.P. Morgan (Charts) and Citigroup (Charts) led gains on the blue chip index.

Market breadth was positive. On the New York Stock Exchanger, advancers topped decliners by a margin of nine to five on volume of 270 million shares. On the Nasdaq, winners beat losers by a margin of three to two as 372 million shares changed hands.

Treasury prices rose, lowering the yield on the benchmark 10-year note to 4.51 percent from 4.55 percent late Friday. Bond prices and yields move in opposite directions.

Oil prices fell on strong inventory expectations. U.S. light crude for January delivery tumbled 52 cents to $61.51 a barrel on the New York Mercantile Exchange.

The dollar rose against the euro and the yen.

In overseas markets, stocks in Asia closed mostly higher, while stocks in Europe also rose in afternoon trading.

Gearing up for the Fed