US stocks closing: U.S. stocks rose on Tuesday as this year's ongoing surge in merger activity suggested investors were still finding value in the market even as indexes closed in on all-time highs.
Office Depot Inc surged 9.4 percent to $5.02 after a person familiar with the matter said the No. 2 U.S. office supply retailer was in advanced talks to merge with smaller rival OfficeMax Inc, which jumped more than 20 percent.
News of the potential move came just days after Berkshire Hathaway and a partner agreed to acquire H.J. Heinz Co for $23 billion, and following a revised $20 billion takeover of Mexican brewer Grupo Modelo by Anheuser-Busch InBev.
Deal activity has helped equities resist a pullback as investors use dips in stocks as buying opportunities. The S&P is up about 7 percent so far in 2013 and has climbed for the past seven weeks in its longest weekly winning streak since January 2011, though most of the weekly gains have been slim.
The Dow industrials closed 0.9 percent away from their record high while S&P 500 was 2.2 percent off its peak.
"Deals are good for the market," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago. "The fact that they're being done is a positive."
More than $158 billion in deals has been announced so far in 2013, more than double the activity in the same period last year and accounting for 57 percent of global deal volumes, according to Thomson Reuters Deals Intelligence.
The Dow Jones industrial average gained 53.91 points, or 0.39 percent, to 14,035.67. The Standard & Poor's 500 Index gained 11.15 points, or 0.73 percent, to 1,530.94. The Nasdaq Composite Index gained 21.56 points, or 0.68 percent, to 3,213.59.
Other stocks in the office supplies sector also rose. Larger rival Staples Inc shot up 13.1 percent to $14.65 as the best performer on the S&P 500.
"Equity investors have to be encouraged by M&A since, if the number crunchers are offering large premiums, that shows how much value is still in the market," said Mike Gibbs, co-head of the equity advisory group at Raymond James in Memphis, Tennessee.
On the downside, health insurance stocks tumbled, led by a 6.4 percent drop in Humana Inc to $73.01. The company said the government's proposed 2014 payment rates for Medicare Advantage participants were lower than expected and would hurt its profit outlook.
UnitedHealth Group lost 1.2 percent to $56.66.