ANOTHER MILESTONE: The S&P 500 index, the benchmark for most U.S. mutual funds, closed above 1,900 for the first time Friday. The index has gained 3.2 percent so far this year, after surging almost 30 percent in 2013.
THE QUOTE: Although stocks are no longer cheap on an absolute level, they still look good compared to bond prices, said Jeff Knight, Head of Global Asset Allocation at Columbia Management, an asset management company.
"Stocks are still very attractive relative to bonds, and I think that's the key trade-off," said Knight.
While the stock market has made modest gains this year, bonds have surged, contrary to the expectations of many analysts, who had forecast that bond prices would drop as the economy strengthened.
MEATY MERGER: Hillshire Brands, the maker of Jimmy Dean breakfast sausage and other meat products, jumped $8.29, or 22.4 percent, to $45.32 after poultry producer Pilgrim's Pride offered to acquire the company in a deal worth about $5.6 billion.
Pilgrim's Pride said on Tuesday that the deal is better than Hillshire's plan announced earlier this month to buy Pinnacle Foods for $4.23 billion. Pinnacle's stock fell $2.26, or 6.7 percent, to $31.02.
SECOND TRY: Bank of America said it's resubmitting a review of its operations to the Federal Reserve a month after it discovered errors in its initial report, forcing the bank to suspend a dividend increase and a plan to buy back more of its own shares. The bank's stock rose 44 cents, or 3.1 percent, to $15.16.
PAPER CUT: Staples fell 25 cents, or 2.1 percent, to $11.40 after Goldman Sachs cut its earnings outlook for the office supplies retailer. Analysts at the bank expect profit margins at Staples to fall due to its ongoing program of investment and diversification.
CONFIDENCE RISING: U.S. consumers were slightly more confident in the economy in May than in April, partly because they are more optimistic about future hiring and income gains. The Conference Board said Tuesday that its confidence index rose to 83 from 81.7 in April.
Consumers were more positive about the outlook for the labor market. Those anticipating more jobs in the months ahead increased to 15.4 percent from 14.7 percent.
BONDS AND COMMODITIES: The yield on the 10-year Treasury note was unchanged from Friday at 2.53 percent. Crude oil slipped243 cents, or 0.2 percent, to $104.11 a barrel. Gold fell $26.20, or 2 percent, to $1,265.50 an ounce.