Three-month highs set as M&A news counters firm commodities

Small-cap stocks pushed higher Monday, climbing to the highest point since early February as news of a large-cap candy merger stoked investor hope that the worst of the credit crunch has been endured. Despite the optimism spurred by renewed merger and acquisition activity, the advance Monday was relatively tame, with the Russell 2000 (NYSE:IWM) gaining 3.49, or 0.48%, to 725.37. In addition, a late profit-taking spree Monday pressed the Russell off intraday highs and pulled the Dow and S&P 500 just slightly in the red.

A bullish tone for Monday’s action was set in motion overnight when Mars Inc. announced plans to acquire Wrigley (NYSE:WWY) for $23 billion, including a $6.5-billion stake financed by Warren Buffet. If the legendary “Oracle of Omaha” was ready to acquire companies in this sluggish economic environment, then it spurred investor hope that the overall stock market might be undervalued. However, in an interview with CNBC, Buffet cautioned that he thought the economic recovery in the United States could be more prolonged than many anticipate.

Perhaps some of the bullish gusto over the rise to three-month highs was tamed by surging commodity prices, which could not only raise input costs for many manufacturing companies, but also could crimp consumer spending habits and prolong the sluggish economy. On the commodities front, crude oil prices notched a fresh record high overnight just shy of $120 dollars a barrel, but the big . . .

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