• Sweet Merger: Kraft bids $16.7 billion for Cadbury.
• OPEC Expectations: Crude rises ahead of ministers' meeting.
• Thanks, G20: Central bankers' liquidity pledge boosts stocks.
• Gold Grand: Metal near $1,000 an ounce.

The Lowdown

Stocks retained modest gains at the Tuesday afternoon close, starting a holiday-shortened week with a dose of worldwide optimism spurred by a weekend global promise to ensure liquidity that pushed up worldwide markets.

The Dow Jones Industrial Average finished up 56 to 9497. The Nasdaq climbed 19 to 2038, and the S&P 500 picked up 9 at 1025.

Strategists at Credit Suisse see the S&P 500 hitting 1150 by mid-2010, saying GDP growth has continued to be revised up while inflation is muted, earnings momentum is being revised up, many economic variables are back at pre-Lehman levels, valuations are not demanding on long-term measures and only 53% of announced quantitative easing measures have been implemented.

The time to go underweight would be at the second leg down of a W-shaped recovery caused by the Fed raising rates, a funding crisis or China overheating, they said. Equity markets in Europe and Asia advanced while the U.S. was shut, and gold futures broke through $1,000 an ounce for only the second time this year. Gold futures rose as high as $1,009.40. Gold traded at $998 an ounce as of 4:05 p.m.

"The stock market is fine as long as the economy and earnings hold up. The challenge will be rising inflation and interest rates," said Hugh Johnson, chairman of Johnson Illington Advisors.

There also was Kraft Foods' (KFT) $16.7 billion cash-and-stock bid for Cadbury (CBY) , which in U.S. shares is valued at $48.79 a share. Cadbury rejected the bid, saying the offer "fundamentally undervalues" the maker of Dairy Milk chocolate. Analysts said Kraft may raise its offer, and a joint offer from Nestle and Hershey (HSY) also is considered a possibility. Also on the deal front, Deutsche Telekom (DT) and France Telecom (FTE) said they would merge their British mobile phone operations into a single firm.

Oil prices rose ahead of Thursday scheduled meeting of OPEC ministers, in which production levels were forecast to remain constant. As of 3:59 p.m., crude futures traded on the Nymex were up another 11 cents at $72.21 in afternoon trading.

Corporate News

• Insurer American international Group (AIG) sagged at the open after Credit Suisse (CS) analysts downgraded its stock to Underperform from Neutral.
• Morgan Stanley (MS) downgraded computer maker Dell (DELL) to Neutral from Outperform.
• The nation's largest hog producer, Smithfield Foods (SFD) reported a loss of 75 cents a share, below the Street estimates of a 55-cents a share loss. It lost 10 cents a share a year ago.

The Economy

• A weekend meeting of the G20 resulted in pledges to sustain global stimulus by maintaining liquidity as economic conditions improve. Banking regulations and reform were also a subject of the weekend summit. REPORT
• Consumers cut their credit burden by a record amount in July, the Federal Reserve reported Tuesday. Total seasonally adjusted consumer debt fell $21.55 billion, or at a 10.4% annual rate, in July to $2.47 trillion. This is the sixth straight monthly drop in consumer credit. Credit has fallen in every month since then except January. Economists surveyed by MarketWatch expected consumer credit to decline by $4.3 billion. STORY