U.S. stocks edged higher on Monday as merger activity and solid earnings, including Exxon Mobil, overshadowed concerns about the possible spread of unrest in Egypt to other parts of the Middle East.
Stocks held gains even after bellwether Intel Corp fell 1.7 percent to $21.09 after cutting its first-quarter revenue forecast by $300 million due to costs for correcting a design flaw in one of its chips.
This is a minor negative and not as big an issue as it seems. It's ... not as if it was CPU-related; then they'd have a major problem on their hands, said Brendan Furlong, analyst at Miller Tabak in New York.
The M&A activity, typically a sign of confidence in the market, included Alpha Natural Resources, which fell 6.7 percent to $54.01 after it agreed to a $7.1 billion deal to buy Massey Energy Co, which would create the second largest U.S. coal miner by market value.
Massey shares jumped 10.8 percent to $63.42.
Exxon Mobil Corp gained 1.2 percent to $79.90 after the world's largest publicly traded oil company reported a higher-than-expected 53 percent increase in quarterly profit.
The merger and earnings action tempered fears of political unrest spreading to oil-producing Middle Eastern countries as anti-government protests in Egypt continued.
The Dow Jones industrial average was up 26.61 points, or 0.23 percent, at 11,850.31. The Standard & Poor's 500 Index was up 5.70 points, or 0.45 percent, at 1,282.04. The Nasdaq Composite Index was up 3.09 points, or 0.12 percent, at 2,689.98.
The Commerce Department said U.S. consumer spending rose in December for a sixth straight month while a report showed business activity in the U.S. Midwest grew more than expected in January.
(Reporting by Chuck Mikolajczak; Additonal reporting by Yinka Adegoke; Editing by Kenneth Barry)