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S&P 500 index hits another record high

A street sign for Wall Street outside the

A street sign for Wall Street outside the New York Stock Exchange in Manhattan on July 16, 2013. Credit: AP / Mark Lennihan

Stocks rose modestly Thursday, sending the Standard & Poor's 500 index to another record high. Investors rallied behind a bidding war in the food industry as well as a somewhat positive report on the U.S. labor market.

At the close on Wall Street, the S&P 500 was up 10.25 points, or about 0.5 percent, at 1,920, closing above Tuesday's record of 1,911.11. The Dow Jones industrial average gained 65.6 points, or nearly 0.4 percent, to 16,698.7, and the Nasdaq composite added nearly 23, or about 0.5 percent, to 4,248.

Among the biggest gainers was deli meat and hot-dog maker Hillshire Brands, which jumped $7.95, or 18 percent, to $52.76. Only two days after Pilgrim's Pride made a $5.56 billion offer to buy the company, chicken company Tyson Foods stepped in to offer $6.2 billion.

Investors expect that Tyson's offer will start a bidding war. Hillshire's closing price of $52.76 was already above Tyson's offer of $50 per share. The stock is up 43 percent this week alone.

Tyson also rose on the news. The stock gained $2.50, or 6 percent, to $43.25, making the company the biggest gainer in the S&P 500.

The overall stock market has moved little this year, but one theme that continues to play out is the large number of corporate deals being announced. This week, Apple said late Wednesday it would buy Beats Electronics for $3 billion, and now there's the battle over Hillshire Brands.

"It's an encouraging sign because companies see the economy improving," said Joe Tanious, a global markets strategist with J.P. Morgan Asset Management. "Last thing you want to do as a large company is use your cash to buy a company when you have an uncertain outlook on the economy."

Investors also had a round of mixed economic data to interpret Thursday.

The Commerce Department estimated that the U.S. economy shrank at an annual rate of 1 percent in the first three months of the year, worse than the government's initial estimate a month ago of growth of 0.1 percent. The contraction was partly due to the severe weather in January and February, economists said.

While disappointing, investors set aside the GDP report, dismissing it as outdated information on the U.S. economy. The report relayed information from, at best, two months ago and, at worst, from the beginning of the year. Investors have been talking about how the weather impacted U.S. businesses earlier this year for months now.

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