Trading was subdued as investors looked ahead to tomorrow's quadruple-witching day — the quarterly expiration of index futures and options, as well as individual stock futures and options. But the merger news helped blue chips extend a three-day rally, and analysts remained confident about the direction of the economy.

"The fundamentals remain on solid footing and I suspect the year-end rally is going to continue," said Peter Cardillo, chief strategist with S.W. Bach & Co. "Institutional investment adjustments will likely fuel the rally through the end of the year."

In early afternoon trading, the Dow Jones industrial average rose 30.16, or 0.3 percent, to 10,721.61.

The broader gauges were narrowly mixed. The Standard & Poor's 500 index was up 0.87, or 0.1 percent, at 1,206.59, and the Nasdaq composite index lost 0.46, or 0.02 percent, to 2,162.09.

The nation's current account deficit — the broadest measure of trade — climbed to a record high of $164.7 billion in the third quarter of this year, reflecting robust demand for imported oil and foreign-made goods. The latest snapshot of the country's trade situation was lower than the $171 billion economists had expected.

Other economic news was mixed. New claims for jobless insurance fell to a five-month low last week, an encouraging sign of recovery in the labor market. But the number of housing projects to break new ground fell by 13.1 percent in November, the lowest level of activity since May. Economists had expected a smaller drop.

Oil prices eased a day after surging 6 percent on disappointing inventory data. Light, sweet crude for January delivery was down 59 cents to $43.60 per barrel on the New York Mercantile Exchange.

Healthcare products bellwether Johnson & Johnson rose $1.28 to $62.18, after confirming a long-rumored plan to buy Guidant, one of the world's top makers of cardiac devices, for about $25.4 billion in cash and stock. Guidant, which makes pacemakers and cardiac defibrillators, lost 10 cents to $71.95 on the news.

At the Nasdaq, computer security giant Symantec Corp. sank $2.31, or 8.44 percent, to $25.07, after announcing a $13.5 billion deal to buy storage and backup program maker Veritas Software Corp. The merger is designed to create a one-stop shop for protecting against computer viruses and ensuring the reams of vital information stored on corporate networks remains accessible. Veritas shed 33 cents to $27.878.

Goldman Sachs Group Inc. was down $3.10 at $106.15, despite reporting a 23 percent rise in fourth quarter profits on increased transaction volume and a rise in mergers and acquisitions. But while per-share earnings beat Wall Street estimates by 4 cents, revenues of $4.6 billion came in just under the $4.8 billion projected by analysts.