U.S. stocks rise on hopes of corporate deals

NEW YORK (MarketWatch) � U.S. stocks ended higher Tuesday, pushing the S&P 500 index to a five-year high, buoyed by a rise in corporate deal activity and an improvement in German investor sentiment.

�Recent mergers and acquisitions are further evidence of just how high the mountain of cash has grown for corporate America,� said Andrew Fitzpatrick, director of investments at Hinsdale Associates.

Click to Play Week ahead: Sequester looms

Next week brings reports on housing and consumer prices, but the spotlight may be dominated by the approaching March 1 spending cuts known as the sequester.

�These companies are starting to be forced to possibly pursue deals, raise dividends or buy back stock, all of which are key drivers that could move stocks higher,� he said.

The Wall Street Journal reported Monday, a market holiday, that OfficeMax Inc. OMX �and Office Depot Inc. ODP �were in advanced merger talks, with an announcement possible as early as this week. Market Extra: Staples wins if Office Depot and OfficeMax merge.

Shares of both office-supply chains rallied, as did Best Buy Co. Inc. BBY �after the electronics retailer was upgraded by Stifel Nicolaus & Co. and Barclays PLC.

After locking in a seventh straight week of gains Friday, the S&P 500 SPX on Tuesday climbed 11.15 points, or 0.7%, to 1,530.94, with energy and consumer staples the top gainers and materials the only decliner among the index�s 10 major sectors.

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Shares of Google Inc. GOOG �climbed as high as $807 during the session, the loftiest level since the company went public in 2004.

General Mills Inc. GIS � rose 1.9% after the cereal maker reaffirmed its earnings outlook for 2013.

Packaging manufacturer Sealed Air Corp. SEE �leapt 9% after reporting fourth-quarter revenue that beat Wall Street estimates.

Health insurers were slammed after Humana Inc. HUM �said the government�s proposed 2014 Medicare payment rates were lower than had been anticipated and would dent its projected profit.

The Dow Jones Industrial Average DJIA �rose 53.91 points, or 0.4%, to 14,035.67, with 22 of its 30 components climbing. Read about the track record of the 200-day moving average as an indicator.

Michael Rivera/Wikipedia OfficeMax location in Valdosta, Ga.

Boeing Co. BA �was among the blue-chip decliners, with shares of the plane manufacturer off 0.5% ahead of a vote by union engineers that ends Tuesday night on whether to approve a strike over retirement benefits. The dispute comes as Boeing addresses concerns over its 787 Dreamliner, grounded for more than a month by battery failures.

The Nasdaq Composite index COMP � added 21.56 points, or 0.7%, to 3,213.59.

More than 734 million shares traded on the New York Stock Exchange, where composite volume topped 3.7 billion.

Wall Street�s advance continued even as a a gauge of builder sentiment unexpectedly fell in February from the more-than-six-year high hit in January. Read more about the sentiment of residential builders.

A separate report signaled Europe�s biggest economy seems to be recovering from its slide, with German investor confidence in February rising to a nearly three-year high.

At the White House, President Barack Obama on Tuesday held a nationally televised news conference to speak out against what he called the �meat cleaver� approach of the $1.2 trillion in automatic cuts to government spending scheduled to start March 1. MarketWatch Topics: Sequester.

Obama spoke after the men who led his 2010 deficit-reduction commission proposed a revised plan. Democrat Erskine Bowles and Republican Alan Simpson are calling for steps to cut the deficit by $2.4 trillion during the next decade. Read more about the updated Simpson-Bowles plan.

Separately, Wall Street analysts on Tuesday noted the death Monday of Martin Zweig, the newsletter writer and technical analyst who famously predicted the 1987 market crash.

Calling Zweig�s death a �terrible loss for the investment community,� Dan Greenhaus, chief global strategist for BTIG LLC, pointed to the re-emergence of the video in which Zweig predicted equities were readying for a �vicious� drop reminiscent of the crash of 1929. Read Mark Hulbert�s tribute to Marty Zweig and his many contributions.