Wall Street opens higher on merger activity

Reuters ? ? ? 3 hrs.

Stocks opened slightly higher on Tuesday, putting the S&P 500 on track to extend its seven-week winning streak on increased mergers and acquisitions activity.

The Dow Jones industrial average was up 57.27 points, or 0.41 percent, at 14,039.03. The Standard & Poor's 500 Index was up 6.57 points, or 0.43 percent, at 1,526.33. The Nasdaq Composite Index was up 11.37 points, or 0.36 percent, at 3,202.72.

The S&P 500's advance is the longest streak since January 2011, and the benchmark index is up 6.6 percent so far this year.

The strong start was fueled by legislators in Washington temporarily averting automatic spending cuts and tax hikes as well as by stronger-than-expected earnings and economic data. The Federal Reserve's stimulus policy has also been a major factor.

But further gains for the S&P 500 have been a struggle as investors look for new catalysts to lift the index, which hovers near five-year highs.

The compromise by lawmakers on across-the-board spending cuts, known as sequestration, only postponed the matter, and Democrats and Republicans have until March 1 to resolve differences or the cuts, which are predicted to damage the economy, will take effect.

The uptick in merger and acquisition activity, a sign of optimism about the outlook on Wall Street, has resulted in more than $158 billion in deals announced so far in 2013.

Last week, deals were reached for the acquisition of H.J. Heinz Co by Berkshire Hathaway and the sale by General Electric of its remaining stake in NBCUniversal to Comcast Corp .

"M&A is providing an enormous amount of enthusiasm in pockets and it is really a function of the cost of money, the cost of borrowing. It is a sign there is a shift going on in the economy that is very, very positive," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

"At the same time, if you take the M&A activity out of the picture, you will see that many on the Street are expecting a pullback.

Office Depot Inc surged 30.9 percent to $6.01 after a person familiar with the matter said the No. 2 U.S. office supply retailer is in advanced talks to merge with smaller rival OfficeMax Inc . A deal could come as early as this week. OfficeMax shares jumped 24.4 percent to $13.37 while larger rival Staples Inc shot up 13.9 percent to $14.75.

U.S. markets were closed on Monday for the Presidents Day holiday.

According to the Thomson Reuters data through Friday, of the 388 companies in the S&P 500 that have reported results, 69.8 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

Copyright 2013 Thomson Reuters.

Source: http://www.nbcnews.com/business/wall-street-opens-higher-merger-activity-1C8422404

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