The stock market had its third straight winning day on signs that companies are becoming more optimistic about the economy.
The Dow Jones industrial average edged up 2 points Tuesday but closed off its best levels. The Dow had managed to erase its losses for the year during trading but was down 22 points for 2010 by the close. Broader indexes pushed into the black for the year on Monday and extended the gains Tuesday.
More merger activity and a plan by Qualcomm Inc. to buy back stock brought reassurance that business leaders expect the recovery to continue. The economy's health had been in doubt in recent months after reports indicated the pace of improvement was slowing and as countries including Greece struggled with heavy debt loads.
In deal news, CF Industries made a new offer for fertilizer maker Terra Industries, which last month agreed to be sold to Norway's Yara for $4.1 billion. Dow Chemical Co. sold its Styron plastics business to private equity firm Bain Capital for $1.63 billion. Investors see takeovers as a sign of confidence in the economy.
Meanwhile tech company Qualcomm said it would buy back $3 billion in stock. The maker of wireless chips and other mobile technology also raised its dividend by 12 percent. The stock rose 6.7 percent.
Markets got a lift from upbeat economic reports abroad and growing hopes European leaders will complete a bailout for Greece.
Greece's debt problems have tugged at markets around the world for more than a month. Concern grew that the country would default on debt and upend a global recovery. Growing expectations that Germany will lead a rescue for Greece have eased concerns for traders.
"If Greece continues to create a long-term plan, it will get the market back on track," said Bryan Hopkins, president of Hopkins Wealth Management Group in Anaheim Hills, California. He said a plan to help Greece get its budget under control could become a blueprint for other countries that face similar problems.
There was other welcome news from overseas. Manufacturing exports in India rose for a third month in January and new orders reached an 18-month high last month. Japan's unemployment rate dropped for the second straight month in January and household spending grew, both hopeful signs for the world's second-largest economy.
The array of reports about dealmaking and improvements in economic readings are clues for investors who are trying to determine how fast a recovery will take place. A long climb in the stock market began to stall in mid-January following mixed economic reports and concern about debt in Greece and other relatively weak European economies like Portugal and Spain.
Major stock indexes stand at their highest levels in more than a month but the gains have come in light trading volume. That indicates many investors are staying out of the market as they await more evidence about the economy.
According to preliminary calculations, the Dow rose 2.19, or less than 0.1 percent, to 10,405.98. It is up 85 points in three days.
The broader Standard & Poor's 500 index rose 2.60, or 0.2 percent, to 1,118.31, and the Nasdaq rose 7.22, or 0.3 percent, to 2,280.79.