S&P Near Record

Thanks primarily to announcements of company acquisitions, stock prices on Wall Street rose on Tuesday, approaching record levels.

The Dow Jones strengthened by 53 points, or 0.39 percent, to 14,035 points, while the S&P 500 increased by 0.73 percent to 1,530 points, and the Nasdaq index rose by 0.68 percent to 3,213 points.

Among the biggest winners yesterday was OfficeMax’s stock, which jumped by more than 20 percent after news that Office Depot, the second-largest American office supply retail chain, would acquire the company. Office Depot’s stock rose by more than 9 percent.

Acquisition offers in recent days are supporting the market. Last week, Berkshire Hathaway, the company of influential investor Warren Buffett, offered $23 billion to purchase Heinz, while Anheuser-Busch InBev offered $20 billion to acquire the Mexican brewer Grupo Modelo.

Since the beginning of the year, the value of announced acquisitions in the U.S. has reached $160 billion, double that of the same period last year, indicating that company management assesses valuations as acceptable for acquisitions and expects an improvement in the economic situation.

“Acquisitions are always good for the market; they encourage investors. And if large premiums are offered, it shows how much value still lies in the market,” says Mike Gibbs, a director at the advisory firm Raymond James.

Acquisition announcements have prevented the stock price correction that was expected after the strong market growth at the beginning of the year.

Since the beginning of the year, the S&P 500 index has risen about 7 percent, bringing it within 2.2 percent of its record level. The Dow Jones is only 0.9 percent away from its highest level in history, reached in 2007.

The market is also supported by solid quarterly business results from companies.

According to Thomson Reuters data, of the 391 companies in the S&P 500 index that have reported so far, 70 percent achieved higher profits in the last quarter of last year than expected, while the average percentage of earnings surprises in the last four quarters was 65 percent.

At the same time, the earnings of these companies increased by 5.6 percent compared to the same period last year, while at the beginning of the earnings announcement season, a growth of 1.9 percent was expected.

European stock prices also rose yesterday. The London FTSE index strengthened by 0.96 percent to 6,379 points, while the Frankfurt DAX rose by 1.62 percent to 7,752 points, and the Paris CAC increased by 1.88 percent to 3,735 points.