U.S. stocks were set for a higher open on Monday with Wall Street looking to extend three weeks of gains as some investors said shares could rally in a thinly traded, holiday-shortened week.

Several companies announced acquisitions. AT&T Inc said it would buy wireless spectrum licenses from Qualcomm Inc in a deal worth $1.9 billion. Qualcomm rose 1.2 percent to $50.06 in premarket trade, and AT&T rose 0.7 percent $29.42.

Stocks have rallied strongly this month, with the S&P 500 index up more that 5 percent in December to a two-year high. Some investors say that the market is overbought, however, and could be ripe for profit-taking.

The channel is sideways to higher. The market is clearly bid, said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

The S&P 500 has rallied nearly 19 percent since the end of August and is up 11.6 percent so far this year.

Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, said the trend in stocks was higher but said elevated bullishness and options activity was pointing to a near-term top in equities.

Perhaps we could see a bit of a prick to the euphoria bubble that investors seem to be experiencing, he said.

S&P 500 futures rose 4.6 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 38 points, while Nasdaq 100 futures rose 9.25 points.

U.S. markets will be closed on Friday to observe the Christmas Day holiday the following day.

EarthLink Inc said it will acquire One Communications Corp for $370 million, and Raytheon Co will acquire Applied Signal Technology Inc for $490 million. Applied Signal shares rose 7.9 percent to $37.81 in premarket trade.

Underscoring expectations of strong holiday spending, U.S. online sales are up 12 percent to $27.5 billion so far this season compared with a year ago, according to research firm comScore.

Adobe Systems Inc reports quarterly results later in the day. Analysts expect the software maker to earn 52 cents per share, up from 39 cents a year ago.

Genzyme Corp , fighting off a hostile $18.5 billion bid from Sanofi-Aventis SA , will take another stab at persuading investors its experimental multiple sclerosis drug is worth more than Sanofi's projections.

Food and beverage company Sara Lee Corp has been in talks to sell itself to Brazilian meat producer JBS , but the two companies are at odds over price, a source said. Sara Lee shares fell 2 percent to $16.91 in premarket trade.

(Editing by Padraic Cassidy)