NEW YORK — A series of multi-billion dollar acquisitions gave Wall Street a modest advance today although many investors remained cautious ahead of the Federal Reserve's decision on interest rates later in the week.

Investors were cheered by news from mining company Phelps Dodge Corp. that it will pay $40 billion in cash and stock for rivals Inco Ltd. and Falconbridge Ltd., while steelmaker Arcelor SA agreed to a $33 billion bid from Mittal Steel Co.

In addition, Dow Jones industrial Johnson & Johnson agreed to buy fellow Dow component Pfizer Inc.'s consumer products unit for $16.6 billion.

Merger-and-acquisition activity is seen as a sign of economic health, as major companies aren't expected to make major deals if they expect a decline in the economy. Yet Wall Street's boost from these deals could be short-lived as investors continue to fret over just how far the Fed will raise rates to combat inflation.

"I think the hand-wringing that's hampered the market will get out of the way after the Fed's meeting Thursday," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati. "But clearly, the Fed is still going to be hawkish on inflation, and that means the possibility of more hikes down the road."

According to preliminary calculations, the Dow rose 56.19, or 0.51 percent, to 11,045.28.

Broader stock indicators also made gains. The Standard & Poor's 500 index was up 6.06, or 0.49 percent, at 1,250.56, and the Nasdaq composite index climbed 12.20, or 0.58 percent, to 2,133.67.

Bonds were little changed after last week's record-setting selloff, with the yield on the 10-year Treasury note rising to 5.24 percent from 5.23 percent late Friday. The dollar fell against most major currencies, while gold prices were little changed.

Oil priced moved higher on concerns about a shipping glitch in the Gulf of Mexico. A barrel of light crude settled at $71.80, up 93 cents, on the New York Mercantile Exchange.

In a week with little fresh economic data, investors welcomed the latest Commerce Department report on new home sales. Sales fell to an annualized rate of 1.234 million in May, down from 1.198 million the previous month but better than the 1.15 million economists expected.

While the Fed likely will dominate trading later in the week, traders welcomed the chance to buy up stocks in the mining, steel and healthcare sectors, which aside from the M&A activity there, are seen as defensive plays for a questionable economy.

"It's definitely about the M&A activity today, because other than that, you're really not seeing much else out there moving," said Brian Williamson, equity trader at The Boston Company Asset Management.

Inco surged $5.95, or 10 percent, to $64.21 and Falconbridge gained $2.50, or 5.1 percent, to $51.80 on Phelps Dodge's takeover announcement. The combined company, to be called Phelps Dodge Inco, will be the world's largest nickel producer and the world's largest publicly traded copper producer. Phelps Dodge tumbled $6.72, or 8.1 percent, to $76.23.

Mittal Steel fell 77 cents to $31.40 after wrapping up a sometimes-acrimonious acquisition agreement of Belgium's Arcelor. However, Arcelor shareholders must still vote down a competing offer from Russian steelmaker OAO Severstal at a shareholder meeting Friday for the Mittal deal to be finished.

Pfizer climbed 37 cents to $23.01 after it agreed to sell Johnson & Johnson its consumer products unit, which includes such brand names as Listerine, Nicorette and Sudafed. Johnson & Johnson fell $1.11 to $60.21.

In earnings news, Walgreen Co.'s quarterly earnings rose 14 percent as newly opened stores generated increased sales. Shares of Walgreen, which beat analysts' profit forecasts by 2 cents per share, added 49 cents to $44.10.

Homebuilder Lennar Corp. gained $1.14 to $45.68 after it announced a 33 percent jump in second-quarter profit. However, the company reduced its full-year earnings forecasts due to an anticipated slowdown in the housing market.

Advancing issues outnumbered decliners by nearly 5 to 3 on the New York Stock Exchange, where volume came to 1.35 billion shares, compared with 1.42 billion traded on Friday.

The Russell 2000 index of smaller companies rose 8.50, or 1.23 percent, to 698.64.

Overseas, Japan's Nikkei stock average rose 0.19 percent. In Europe, Britain's FTSE 100 closed down 0.19 percent,France's CAC-40 fell 0.34 percent for the session, and Germany's DAX index lost 0.27 percent in late trading.