Techs lead the way

NEW YORK (CNNMoney.com) -- Stocks rose Monday morning, led by a rally in the tech sector, but investors remained cautious ahead of this week's Federal Reserve meeting.

The Dow Jones industrial average (up 27.32 to 12,334.81, Charts) and the broader Standard & Poor's 500 index (up 3.90 to 1,413.74, Charts) both rose modestly about 2-1/2 hours into the session. The 30-share Dow briefly eclipsed its closing high of 12,342.56 reached Nov. 17 but then backed off.

The tech-fueled Nasdaq composite (up 12.55 to 2,449.91, Charts) climbed about 0.5 percent.

While investors widely expect policymakers to hold interest rates steady when they meet Tuesday, the central bank's statement could provide clues about whether a rate cut may be coming soon.

"The biggest variable facing the market over the coming months is Fed policy and whether the next move will be an easing move or a tightening," said James Stack, president of InvesTech Research.

Ongoing weakness in the housing sector could mean that the Fed won't hike rates again, Stack said. But upward pressure on wages as well as rising raw material prices - both flags for inflation - could keep pressure on the central bank to resume raising rates.

The Fed has held interest rates steady at 5.25 percent at its three past meetings. Before that, policymakers had raised rates 17 straight times in an effort to keep inflation in check.

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

Big tech companies like Microsoft (Charts), Cisco Systems (Charts) and Apple (Charts) all gained in active trading on the Nasdaq

Decliners included biotech Nuvelo (down $15.79 to $3.76, Charts), which plunged 82 percent after it said its experimental drug for dissolving blood cots didn't meet its goal in late-stage studies.

Financials J.P. Morgan (Charts) and Citigroup (Charts) led gains on the 30-share Dow.

A wave of deal news also boosted some shares.

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 (up $2.03 to $30.35, Charts), the owner of both Travelocity Web site and the computer reservation system used by travel agents 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 (up $1.59 to $41.49, Charts) jumped 4 percent on news that Smith & Nephew (Charts), Europe's biggest medical device maker, 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. The company's shares rose nearly 1 percent.

Market breadth was positive. On the New York Stock Exchange, advancers topped decliners by a margin of three to two on volume of 486 million shares. On the Nasdaq, winners beat losers also by a margin of three to two as 731 million shares changed hands.

Treasury prices rose, lowering the yield on the benchmark 10-year note to 4.52 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 lost 36 cents to $61.67 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. Stocks in Europe rose in afternoon trading.

Gearing up for the Fed