12:35pm (EST)

The bulls have made a slight push higher today despite a mixed bag of economic news and a higher dollar.  Merger and Acquisition (M&A) news has also provided some enthusiasm as the market has pushed back above key levels of support.

The Commerce Department reported retail sales rose 1.2% last month, which was nearly double the gain that had been expected and the largest increase since March.  A lot of the strength came from a jump in autos as dealership sales increased 5%.  October sales were 12.3 million units, the best monthly showing since the government’s Cash for Clunkers program in August 2009.  Excluding autos, retail sales showed a 0.4% gain.

The business inventory data for September showed a 0.9% increase, which was pretty much in-line with estimates.

On the negative side, the Empire Manufacturing Survey came in at -11.1, well below the 11.7 that had been widely expected.  This was a huge reversal from the 15.7 showing for the prior month.

In M&A activity, Caterpillar (CAT, $83.13, up $2.09), the world’s largest construction and mining equipment maker, decided now is the time to buy Bucyrus International (BUCY, $89.79, up $20.17) and moved aggressively to capitalize on the demand for commodities in emerging markets.  Both stocks are trading higher on the $7.6 billion buyout offer.

Caterpillar will pay $92 a share to acquire Bucyrus. The deal, which is valued at $8.6 billion if you include the debt, is expected to close in mid-2011.

Elsewhere, EMC (EMC, $21.62, down $0.10) the biggest maker of corporate data storage equipment, has made a $2.25 billion offer to buy Isilon Systems (ISLN, $33.70, up $7.50).  The data storage sector has been among the hottest takeover targets as “cloud computing”, the use of technology to access remote computing power and data over the Internet, gains even more traction.

Given last week’s selloff, today’s move higher is a nice showing by the bulls but we are expecting volatility to pick up as we head towards Friday.  Currently, the Dow is up 62 points to 11,255 while the S&P 500 is higher by 5 points to 1,204.  The Nasdaq is advancing by 5 points to 2,523.

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