Stocks advanced Tuesday, as investors drew encouragement from Microsoft's $8.5 billion deal for Skype Technologies and from signs of strength in the global economy.
The Dow Jones Industrial Average climbed 75.68 points, or 0.6%, to close at 12760.36, for its biggest point and percentage gain in nearly two weeks. The Standard & Poor's 500-stock index tacked on 10.87, or 0.8%, to 1357.16, with utilities and consumer-discretionary stocks in the lead. The Nasdaq Composite gained 28.64 points, or 1%, to finish at 2871.89.
Stocks advanced, as investors drew encouragement from Microsoft's $8.5 billion deal for Skype Technologies and from signs of strength in the U.S. economy and overseas. Joe Bel Bruno has details.
Microsoft's deal for Skype boosted hopes for further consolidation among technology companies, although the Windows maker's stock shed 16 cents, or 0.6%, to $25.67 after it announced its most-expensive deal ever. The company said its buyout of Skype will boost products including Xbox, Kinect and Windows Phone.
Stocks stayed higher after data showed U.S. wholesalers stockpiled goods in March as sales rose strongly, suggesting some improvement in an economy that slowed early this year. Data showing a large trade surplus in China also convinced more investors that the country's growth remains intact.
"M&A as an important force underlying the equities markets cannot be underestimated," said Michael Purves, chief market strategist at BGC Financial, speaking of mergers and acquisitions. Factors such as the volume of mergers and the dollar size of transactions were likely to keep investors more optimistic, he added. In addition, as earnings season draws to a close, "You haven't had any earnings disasters."
Walt Disney led the Dow as it rose 81 cents, or 1.9%, to 43.91, followed by Hewlett-Packard, which added 55 cents, or 1.3%, to 41.57.
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Among companies reporting earnings, Dean Foods jumped 1.26, or 11%, to 12.24, after its first-quarter earnings topped Wall Street's estimates.
Wendy's/Arby's Group gained 20 cents, or 4.2%, to 5.02, as the fast-food chain operator's first-quarter loss narrowed and revenue edged up at its Arby's chain. Investors shrugged off a cut to the company's full-year earnings forecast, which cited significantly higher commodity costs.
Medifast gained 3.64, or 18%, to 24.03, as its first-quarter profit jumped 30%, topping analysts' expectations.
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Community Health Systems shed 18 cents, or 0.6%, to 30.90, as it withdrew a sweetened offer to buy Tenet Healthcare after the latter rejected the bid as undervaluing the company. Tenet's stock rose 11 cents, or 1.7%, to 6.63.
Sotheby's shares slid 2.83, or 6.1%, to 43.71, as the auction house swung to a slimmer-than-expected first-quarter profit.
Southeastern gas-station and convenience-store chain Pantry's fiscal second-quarter loss narrowed sharply absent year-earlier write-downs and litigation-related charges. Shares rose 2.16, or 13%, to 18.21.
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Microsoft to Acquire Skype
Triumph Group gained 9.7%, or 11%, to 98.25, after the aircraft-component manufacturer reported surging fourth-quarter revenue.
In economic data, investors weren't much perturbed by data showing U.S. import prices continue to rise at a strong pace. The price of goods imported to the U.S. rose by a higher-than-expected 2.2% in April from the month before, the Labor Department said. It was the first time since June 2008 that import prices increased by more than 2% for two straight months.
Write to Brendan Conway at brendan.conway@dowjones.com
chief market strategist, dow jones industrial average, dow jones industrial, mergers and acquisitions, earnings season, highs and lows, consumer discretionary stocks, nasdaq composite, dollar size online, percentage gain, compani, windows phone, dow jones, stock index, purves, global economy, trade surplus, walt disney, gainers, technology companies
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