Wall Street advances as Microsoft buys Skype

Dow Jones: 12,760.36 (+75.68) SP 500: 1,357.16 (+10.87) Nasdaq: 2,871.89 (+28.64): US STOCKS rose for a third day yesterday, as higher than estimated profit forecasts and Microsoft's purchase of Skype Technologies bolstered optimism that earnings and takeovers will continue to fuel the rally.

Dean Foods, the largest US milk processor, jumped 11 per cent after its earnings forecast beat analysts’ estimates.

Microsoft fell 0.6 per cent after agreeing to buy Skype for $8.5 billion to expand its Internet presence after past failures.

Titanium Metals gained 2.1 per cent, pacing gains in raw-material producers, as metal prices advanced before the release of figures that may show weaker inflation in China.

The Dow Jones industrial average rose 75.68 points, or 0.60 per cent, at 12,760.36.

The Standard Poor’s 500 Index climbed 10.87 points, or 0.81 per cent, at 1,357.19.

The Nasdaq Composite Index advanced 28.64 points, or 1.01 per cent, at 2,871.89.

“The earnings season has been a pleasant surprise,” said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC.

“There wasn’t a great deal of optimism that earnings were going to beat estimates with the vigour that we’ve seen. On top of that, we’re getting big MA deals. That’s an indication that companies have a lot of cash and will continue to do deals,” he said.

Prices of goods imported into the US rose more than forecast in April, driven by gains in fuel and food that may put pressure on some companies to raise prices.

The 2.2 per cent increase in the import price index followed a revised 2.6 per cent gain in March, Labor Department data showed.

Economists projected a 1.8 per cent increase, according to Bloomberg. Prices excluding fuel advanced 0.6 per cent.

Financial, technology and health-care stocks offer “value”, Bill Miller, the chairman and chief investment officer of Legg Mason Capital Management, wrote in the Financial Times yesterday.

Boston Scientific was the most heavily traded stock on the Big Board after chief executive Ray Elliot said he will step down at the end of 2011.

The surprise announcement sent shares of the medical device maker down 8.9 per cent to $7.02. – (Bloomberg/Reuters)