Stocks Pause Ahead of Fed

Stocks rallied early Monday on merger news, then paused as traders grew cautious ahead of the Federal Reserve’s latest decision on interest rates and fourth-quarter GDP data.

Both will be due out on Wednesday, followed by Google’s quarterly earnings report after the close.

Economists believe the economy grew at a 3% rate in the fourth quarter, a full percentage point higher than the third quarter. Traders are hoping that Wednesday morning’s report won’t be so strong that it prompts the Fed to raise interest rates, as hopes for a rate cut have all but disappeared in recent weeks.

Silicom was a big mover, soaring 42% after reporting 60% year-over-year sales growth.

Altiris jumped 20% on news that it will be acquired by Symantec .

Deutsche Telekom fell 5% after lowering its outlook, and Radware fell 12% on its outlook.

Verizon edged higher after reporting results in line with estimates.

The Nasdaq added 5 to 2441, the S&P 500 lost 1 to 1420, and the Dow tacked on 3 to 12,490. Volume rose to 2.73 billion shares on the NYSE, and 1.99 billion on the Nasdaq. Advancers led 17-14 on the NYSE, and 17-12 on the Nasdaq. Upside volume was 46% on the NYSE, and 56% on the Nasdaq. New highs-new lows were 181-16 on the NYSE, and 164-41 on the Nasdaq.

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