US stocks move higher ahead of Fed meeting

Wall Street extended its advance today as investors considered several takeover developments and placed bets ahead of the Federal Reserve’s decision on interest rates.

A series of recent acquisition announcements has reassured investors that corporations still feel the economy is robust enough to strike deals. About 45.4 billion worth of acquisitions were announced by Standard & Poor’s 500 companies last week, setting up this year to be the best for M&A since 2000.

Driving the Dow Jones industrials was American International Group, which agreed to buy the US port operations of state-owned Dubai Ports World. Hedge fund SAC Capital Advisors LLC bought a stake in miner Phelps Dodge, and said it would oppose the company’s planned takeover by Freeport-McMoRan Copper & Gold Inc.

Speculation about possible deals also helped the market. Medical device maker Biomet and travel reservation company Sabre Holdings rose on reports they might be acquisition targets.

“M&A is generally viewed upon as being a positive to the market,” said Steven Goldman, chief market strategist at Weeden & Co. “But, the markets will likely stay relatively shallow, ebbing and flowing about whether we’ll cut rates in the first quarter.”

Light volume today indicated investors were a bit more cautious as they adjusted their positions before the Fed’s meeting tommorrow. The central bank raised rates 17 times in a row starting in June 2004, then left them unchanged at its last three meetings.

The Dow rose 20.99, or 0.17%, to 12,328.48.

Broader stock indicators also advanced. The S&P 500 index rose 3.20, or 0.23%, to 1,413.04, and the Nasdaq composite index was up 5.50, or 0.23%, at 2,442.86.