US-STOCKS-Wall St looks to extend year-end rally

                                

                                
 * AT&T to acquire wireless spectrum licenses from Qualcomm
                                
 * Investors eye fourth week of gains
                                
 * S&P up 11.6 percent in 2010 but could be overbought
                                
 * Indexes up: Dow 0.1 pct, S&P 0.3 pct, Nasdaq 0.3 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
                                
 (Updates to open)
                                
 By Edward Krudy
                                
 NEW YORK, Dec 20 (Reuters) - U.S. stocks rose on Monday
with Wall Street looking to extend three weeks of gains as some
investors said shares could rally in a thinly traded,
holiday-shortened week.
                                
 Several companies announced acquisitions. AT&T Inc <T.N>
said it would buy wireless spectrum licenses from Qualcomm Inc
<QCOM.O> in a deal worth $1.9 billion. Qualcomm rose 0.4
percent to $49.64 in premarket trade. AT&T rose 0.2 percent
$29.26.
                                
 Stocks have rallied strongly this month, with the S&P 500
index up more that 5 percent in December to a two-year high.
Some investors say that the market is overbought, however, and
could be ripe for profit-taking.
                                
 "The channel is sideways to higher. The market is clearly
bid," said Peter Kenny, managing director at Knight Equity
Markets in Jersey City, New Jersey.
                                
 The S&P 500 has rallied nearly 19 percent since the end of
August and is up 11.6 percent so far this year.
                                
 Mark Luschini, chief investment strategist at Janney
Montgomery Scott in Philadelphia, said the trend in stocks was
higher but said elevated bullishness and options activity was
pointing to a near-term top in equities.
                                
 "Perhaps we could see a bit of a prick to the euphoria
bubble that investors seem to be experiencing," he said.
                                
 The Dow Jones industrial average <.DJI> gained 16.27
points, or 0.14 percent, to 11,508.18. The Standard & Poor's
500 Index <.SPX> rose 3.37 points, or 0.27 percent, to
1,247.28. The Nasdaq Composite Index <.IXIC> added 8.18 points,
or 0.31 percent, to 2,651.15.
                                
  U.S. markets will be closed on Friday to observe the
Christmas Day holiday the following day.
                                
 EarthLink Inc <ELNK.O> said it will acquire One
Communications Corp for $370 million, and Raytheon Co <RTN.N>
will acquire Applied Signal Technology Inc for $490 million.
Applied Signal shares rose 7.9 percent to $37.79 <APSG.O>.
EarthLink fell 3.9 percent to $8.64.
                                
 Underscoring expectations of strong holiday spending, U.S.
online sales are up 12 percent to $27.5 billion so far this
season compared with a year ago, according to research firm
comScore. For details, see [ID:nN19285412]
                                
 Adobe Systems Inc <ADBE.O> reports quarterly results later
in the day. Analysts expect the software maker to earn 52 cents
per share, up from 39 cents a year ago. The stock rose 1.5
percent to $29.19.
                                
 Food and beverage company Sara Lee Corp <SLE.N> has been in
talks to sell itself to Brazilian meat producer JBS <JBSS3.SA>,
but the two companies are at odds over price, a source said.
Sara Lee shares rose 1 percent to $17.44. [ID:nN19146410]
  (Editing by Padraic Cassidy)