Deal for Skype Lifts Wall Street
By THE ASSOCIATED PRESS 4:17 PM ET
Stocks closed higher Tuesday on Wall Street amid strong corporate earnings and after Microsoft agreed to buy the Internet telephone service Skype for $8.5 billion. Companies have built up a record amount of cash since the recession, and they have begun to use it for acquisitions, dividends and stock buybacks. Technology companies have particularly big cash hoards; Microsoft had $50 billion in cash and short-term investments at the end of March.. The purchase of Skype is Microsoft’s largest deal in its history. Large companies also want to put their cash stockpiles to work because they're getting minimal returns on them, said Oliver Pursche, president of Gary Goldberg Financial Services. Interest rates for short-term savings pay less than 1 percent. “The crisis is behind us,” he said. Companies “don't need this much cash anymore.” …
The Dow Jones industrial average rose 75.68 points, or 0.6 percent, to close at 12,760.36. The Standard & Poor’s 500-stock index rose 10.87 points, or 0.8 percent, to 1,357.16. The Nasdaq composite index climbed 28.64 points, or 1 percent, to 2,871.89. Nearly five shares rose for every one that fell on the New York Stock Exchange. Trading volume was 3.5 billion shares.