MARKET SNAPSHOT: U.S. Stocks Inch Higher After Upbeat Data

By Anora Mahmudova, MarketWatch

NEW YORK (MarketWatch) -- The U.S. stock market reversed opening losses and edged higher on Monday as upbeat economic reports and deal news outweighed concerns about violence in Iraq.

Better-than-expected manufacturing reports and housing data as well as a flurry of deal news lifted the main benchmarks out of opening losses. Limiting gains were concerns about a worsening situation in Iraq. Over the weekend, militants in Iraq tweeted out images supporting a claim they had executed hundreds of Shiite Iraqi soldiers. The killings were not verified, according to reports.

The S&P 500 (SPX) added 3 points, or 0.2%, to 1,939.04. The Nasdaq Composite (RIXF) rose 8 points, or 0.2%, to 4,318.71, helped by a 1% gain in Apple Inc. (AAPL), its biggest component.

The Dow Jones Industrial Average (DJI) ticked up 6 points to 16,782.04.

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Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said that given the recent gains on the S&P 500, stocks are in pause mode.

"From the technicals standpoint, markets are slightly extended and until the earnings season we expect stocks to trade sideways with the downward bias," Sandven said.

Fresh data from the factory sector showed that manufacturing remained a bright spot in the U.S. economy at the end of the second quarter.

Manufacturing activity in the New York region held steady in June after hitting an almost four-year high in May, the Federal Reserve Bank of New York said Monday.

Industrial production bounced back in May after a drop in April that wasn't as bad as initially estimated.

Home builders' confidence rose in June to the highest level in five months, but respondents were still a bit pessimistic, according to the National Association of Home Builders/Wells Fargo housing-market index released Monday.

Merger Monday

Medtronic Inc. (MDT) announced Sunday that it plans to buy Ireland-based Covidien PLC (COV) in a $42.9 billion deal. The cash-and-stock offer would be valued at $93.22 per Covidien share. Shares of Covidien soared 22%, while Medtronic fell 1%. Medtronic, big health companies look to dodge U.S. taxes

Shares of Bluebird Bio Inc. (BLUE) soared 41% after the company reported promising preliminary data on experimental gene therapy for patients with inherited blood disorders.

Level 3 Communications Inc. (LVLT) shares dropped 6% after the company said Monday it agreed to acquire TW Telecom Inc. (TWTC) in a deal worth about $7.3 billion, including the assumption of $1.6 billion in debt. Level 3 said it secured committed financing valued at $3 billion.

TW Telecom shares increased 7%.

Fusion-io Inc. (FIO) shares surged 23% after SanDisk Corp. (SNDK) on Monday agreed to buy Fusion-io in an , or $11.25 a share.

Yahoo Inc. (YHOO) dropped 5% after Chinese Internet company Alibaba reported slowing revenue growth for the year. Yahoo owns 24% of Alibaba.

In other markets, European stocks fell after a weekend of increasing violence in Iraq. Japanese stocks fell in a mixed session for Asia as Iraq worries pushed the Japanese yen (USDJPY) higher against the dollar.

The British pound tapped $1.70 against the dollar and traded at a nearly five-year high on speculation the Bank of England could be one of the first major central banks to break away from ultra-easy monetary policy.

Oil prices (CLN4) pulled back from stronger, earlier gains, while gold(GCQ4) was higher.

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