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NEW YORK (AP) — Talk of more mergers and acquisitions is sending stock prices higher in early trading, setting the market up to continue a seven-week rally.
Reports that retailers Office Depot and OfficeMax are discussing a combination come after several big corporate deals were announced in recent weeks. Investors are becoming optimistic that more deals could be on the way as buyers pay premium prices for publicly traded companies.
The Dow Jones industrial average was up 48 points at 14,030 at midday Tuesday. U.S. markets were closed Monday for the Washington's Birthday holiday.
The gains were broad. Nine of the 10 industry groups tracked by the Standard & Poor's 500 index rose, led by consumer staples. Two stocks rose for every one that fell on the New York Stock Exchange.
The S&P 500 was up seven points at 1,527. The technology-heavy Nasdaq composite index was up nine points at 3,201. Google traded above $800 a share for the first time.
Markets were also higher in Europe following news that the German economy is picking up steam. Indexes rose about 1 percent in Germany, France and Britain.
Stocks of office supplies stores jumped in early trading following a report in The Wall Street Journal that OfficeMax and Office Depot were considering a deal to combine, which would result in big cost savings. The paper said an announcement could come as early as this week.
OfficeMax soared $2.73 to $13.48, a gain of 25 percent, and Office Depot shot up 821 cents to $5.41, a gain of 18 percent. Staples also rose as investors anticipated that more mergers could be on the way for companies that sell office supplies.
Analysts cautioned that corporate deals in the highly competitive office supply business may not win the approval of antitrust regulators. Staples tried to buy Office Depot in 1997 but was blocked by the Federal Trade Commission.
The news follows shortly after a wave of big corporate deals that involved household names such as Heinz and Dell.
Health insurers fell following the release of preliminary government data that suggests rate cuts to Medicare Advantage plans for next year that were steeper than many had anticipated.
Humana had the biggest loss in the S&P 500, dropping $6.27 to $71.72, a drop of 8 percent. UnitedHealth fell $1.35 to $56. Humana and UnitedHealth are the two largest Medicare Advantage providers.
The government says it expects costs per person for Medicare Advantage plans to fall more than 2 percent in 2014. The government uses this figure as a benchmark to determine payments for these privately run versions of the government's Medicare program, which covers the elderly and disabled. Medicare Advantage plans are offered by health insurers and subsidized by the government.
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