US STOCKS-S&P 500 at fresh record, small caps continue to bounce
* Hillshire Brands shares jump after Pilgrim's Pride bid
* Cisco shares up on Deutsche Bank upgrade, price target hike
* Aeropostale jumps after it secures $150 mln credit facility
* Indexes up: Dow 0.5 pct, S&P 0.5 pct, Nasdaq 0.9 pct (Updates to morning trading)
By Rodrigo Campos
NEW YORK, May 27 (Reuters) - U.S. stocks rose on Tuesday with the S&P 500 hitting a fresh record high supported by merger activity and as expectations for rate cuts at the European Central Bank stoked bids for equities.
ECB chief Mario Draghi said on Monday the bank must be "particularly watchful" for any negative price spiral in the euro zone. That added to suggestions from other ECB policymakers that the bank was ready to cut rates next week to counter low inflation and weak lending in the euro zone, keeping asset purchases as an option.
U.S. markets were catching up to the ECB news after markets were closed Monday for Memorial Day.
"June has been signaled as the point in time when Draghi has to do something," said Art Hogan, chief market strategist at Wunderlich Securities in New York. "We've had some false starts with the ECB and we hope this is not another one. We hope this is substantial." Continuación...