Summary Box: Stocks extend gains to 3rd day after mergers inject traders with confidence

Summary Box: Prospect of more mergers lifts stocks

RISING CONFIDENCE: Stocks edged higher for a third day as more companies said they were pursuing acquisitions. When companies buy rivals it’s often a sign that they expect the economy, and earnings, to improve.

ANOTHER BOON FOR INVESTORS: The dealmaking also indicates that stock prices aren’t too high. If they were, businesses would think it was too costly to buy a rival.

SOME ROOM FOR CONCERN: The market’s fear gauge — the Chicago Board Options Exchange’s Volatility Index — fell to its lowest level since January. The last time the VIX fell to this level stocks began to slide.