US STOCKS-S&P 500 hits record on mergers, small-cap rebound
* Hillshire Brands shares soar after Pilgrim's Pride bid
* Aeropostale jumps after it secures $150 mln credit facility
* Dow up 0.3 pct; S&P 500 up 0.4 pct; Nasdaq up 0.8 pct (Updates to early afternoon, changes byline)
By Chuck Mikolajczak
NEW YORK, May 27 (Reuters) - U.S. stocks advanced on Tuesday after the S&P 500 touched a record high, buoyed by the latest round of merger activity and as expectations for rate cuts at the European Central Bank stoked investors' appetite for equities.
ECB chief Mario Draghi said on Monday the bank must be "particularly watchful" for any negative price spiral in the euro zone. His comments increased bets 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, which were closed Monday for Memorial Day, were catching up to the ECB news.
"(It's) a rate cut or some sort of nonconventional stimulus," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. "No question about it, we had to catch up from yesterday."
Data also gave equities some support. Orders for long-lasting U.S. manufactured goods unexpectedly rose in April and consumer confidence perked up in May, backing views of a rebound in economic growth. Continuación...