By Caroline Valetkevitch
NEW YORK (Reuters) - The Dow and S&P 500 ended at record highs again on Monday as more deal news raised enthusiasm for stocks, though Wall Street's fear gauge advanced.
It was a fourth straight record closing high for the S&P 500 and a third for the Dow. The gains, though, have been moderate in most recent sessions and volume lighter than average.
The CBOE Volatility Index rebounded after falling on Friday to its lowest level since February 2007. Wall Street's "fear gauge" rose 3.9 percent to end at 11.15. The VIX remains at nearly half of its historical average, which some analysts worry is a signal that the market is not fully accounting for issues that could derail the rally.
Monday's merger activity prompted investors to buy some stocks. Merck & Co said it has agreed to buy Idenix Pharmaceuticals Inc in a deal valued at about $3.85 billion.
"Every Monday virtually there seem to be new deals," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston. "It shows how lush corporate balance sheets are, and that's certainly fueling the market's advance."
The Dow Jones industrial average rose 18.82 points or 0.11 percent, to 16,943.10. The S&P 500 gained 1.83 points or 0.09 percent, to 1,951.27. The Nasdaq Composite added 14.84 points or 0.34 percent, to 4,336.24.
The Dow set an intraday record high at 16,970.17, while the S&P 500 touched an all-time intraday high at 1,955.55.
In other deal news, Analog Devices Inc said it would buy Hittite Microwave Corp in a deal valued at $2 billion.
Tyson Foods Inc prevailed over Pilgrim's Pride Corp in a bidding war over Hillshire Brands Co, offering to buy the maker of Jimmy Dean sausages for $8.55 billion, including debt.
Shares of Idenix, which has three drugs in development to treat hepatitis C, soared 229 percent to $23.79 on heavy volume. In contrast, Gilead Sciences the maker of the market-leading hepatitis C treatment, Sovaldi, fell 4.1 percent to $79. Gilead was the biggest drag on the Nasdaq and the S&P 500.
Hittite shot up 28.6 percent to $77.90. Hillshire rose 5.3 percent to $62.06. Merck, a Dow component, edged up 0.2 percent to $57.94. Analog gained 5 percent to $55.31. Tyson slid 6.5 percent to $37.50.
Late in the session, International Game Technology shares surged after Reuters reported the slot machine maker is working with Morgan Stanley to explore a sale.[ID:L2N0OQ1JC] The stock jumped 14.4 percent to end at $14.31. It was the S&P 500's top percentage gainer.
Apple Inc was the Nasdaq's most-active stock, rising 1.6 percent to $93.70 in heavy volume in the tech titan's first trading session after a seven-for-one stock split.
With just 5.4 billion shares changing hands on U.S. exchanges, Monday's volume is below the 5.75 billion average for the last month, according to data from BATS Global Markets.
(Editing by Jan Paschal)