Deal for Skype Lifts Wall Street

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.”

Stronger-than-expected earnings reports are also lifting stocks. ’Dean Foods, ’Activision Blizzard and others reported earnings that beat analysts’ expectations.

Shares in Dean Foods, a dairy producer, jumped 11.5 percent. Dean had a stronger start to the year than it expected and raised its forecast for full-year earnings.

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.

European stock markets and the euro rose on hopes that Greece would get another financial bailout to help it avoid a restructuring of its debts.

A restructuring — a renegotiation of existing debt deals — could have repercussions for Europe’s financial system, causing losses at banks holding Greek bonds. Germany’s DAX rose 1.2 percent. The FTSE 100 index of leading British shares was up 1.3 percent.

Earlier in Asia, Japan’s Nikkei 225 closed up 0.3 percent to 9,818.76, with shares of Chubu Electric Power rising 1.9 percent after the Japanese utility agreed to a government request to shutter three nuclear reactors at the Hamaoka coastal power plant.

Article source: http://www.nytimes.com/2011/05/11/business/11markets.html?partner=rss&emc=rss