Today: Facebook begins testing video advertisements on its social network, and the company's stock reaches all-time highs. Also: Hewlett-Packard (HPQ) gains despite Chromebook recall, acquisitions continue.

The Lead: Facebook's video ads are a reality, and investors seem to like them

Long part of the Silicon Valley rumor mill, Facebook seems ready to take the plunge into video advertising, a move that could help boost the Menlo Park company's fast-growing revenues and is already helping to push its stock price to new heights.

Facebook announced Tuesday that some users would begin to see video advertisements in their News Feed for an upcoming movie, the first public test for video ads, which founder and CEO Mark Zuckerberg has reportedly delayed in order to avoid disrupting the social network's user experience. Facebook's autoplay ads will include two functions meant to avoid angry outbursts from its more than 1 billion users: The ads will not include volume unless a user taps or clicks on them, and they will only appear on smartphones or tablets that are connected to Wi-Fi, to avoid data-usage charges from wireless carriers.

"We'll continue to refine this new way for brands to tell stories on Facebook to ensure the best experience for people and marketers," a company blog post promised.

The move should help Facebook compete better with rivals that already offer such advertising capabilities, as the market for online video advertising is expected to top $4 billion this year and nearly double by 2016, according to eMarketer.

"Facebook is focusing on trying to get parity with what other websites offer," Forrester Research analyst Nate Elliott told Bloomberg News. "If we're just talking about 15-second auto-start video ads, YouTube has been offering them for five years now. Yahoo (YHOO) has been offering them for a decade."

Sterne Agee analysts Arvind Bhatia and Brett Strauser predicted that video ads would boost Facebook's revenues by at least $800 million during the next 3 years, and Topeka Capital Markets analyst Victor Anthony wrote that video ad sales could be worth up to $900 million annually to the company.

"In terms of monetization, the video ads are very important," Robert Baird analyst Colin Sebastian told Reuters. "They're priced a lot higher than traditional display or text ads. And it also opens up for Facebook a larger group of advertisers."

Facebook's revenues are already growing healthily, with the company topping $2 billion in quarterly revenues for the first time in its most recently completed three-month period, during which sales grew 60 percent year-over-year. Investors had already begun pushing Facebook's share price higher after recent earnings statements showed continuing high revenue growth, but Tuesday's increase pushed Facebook stock higher than $55 for the first time, with intraday prices rising as high as $55.18. The stock closed with a 2 percent gain at a record closing price of $54.86, giving Facebook shares a year-to-date gain of 106 percent.

After the bell Tuesday, Facebook announced it had acquired San Francisco startup SportStream, which analyzes data found on the company's social network; details on the price were not disclosed.

SV150 market report: Wall Street dips, Silicon Valley gains amid acquisitions

Wall Street sent stocks tumbling slightly overall Tuesday while awaiting word on whether the Federal Reserve will begin cutting back on bond purchases, but Silicon Valley stocks gained amid a host of acquisitions and a bounce from Hewlett-Packard.

Facebook's late SportStream announcement was at least the fourth local acquisition of the day. Yahoo continued its 2013 practice of acqui-hires, purchasing the three-man team of Stanford-trained engineers who had founded PeerCDN in Palo Alto; terms were undisclosed, and the engineers will begin working at Yahoo's Sunnyvale headquarters. Yahoo dropped 0.6 percent to $39.51 on the day, as CEO Marissa Mayer joined other Silicon Valley bigwigs in a meeting with President Barack Obama. San Jose networking giant Cisco (CSCO) purchased mobile enterprise software company Collaborate.com for an undisclosed price, and its stock continued to recover form last week's doldrums, gaining 1.2 percent to $20.92. eBay (EBAY) also had its eyes on mobile talent, acquiring San Francisco's StackMob, a group that had produced a platform that allowed users to build and manage mobile applications and will now work for eBay's PayPal payments-processing team. eBay shares fell 1 percent to $52.58 in regular trading, but moved back higher than $53 after the announcement was made following the close of trading.

Hewlett-Packard roared 2 percent higher to $27.45 Tuesday despite having to recall the chargers for the Palo Alto tech giant's recent Chromebook offering. Investors were cheered by a note from J.P. Morgan analyst Mark Moskowitz, who increased his rating and price target for HP stock, explaining, "our latest views on PCs and printing are starting to improve." The company's Chromebook offering, which hit the market in October, were yanked off shelves a month later, after reports of overheating chargers; Google (GOOG) has now produced replacement chargers for the devices, which could get them back on store shelves soon. Google fell 0.3 percent to $1,069.86 on the day, while Hewlett-Packard felt good enough to give CEO Meg Whitman a tidy little raise in base salary, from a buck a year to $1.5 million.

Apple (AAPL) dropped 0.5 percent to $554.99 while building its solar-powered data center in Reno, while SolarCity gained 1.2 percent to $52.41 after making an altruistic move. Oracle (ORCL) gained 0.3 percent to $33.63 a day ahead of its quarterly earnings report, and Twitter slipped 0.3 percent to $56.45.Tesla Motors (TSLA) gained 3.1 percent to $152.46 after opening its first supercharger stations in Germany, and Salesforce gained 2.1 percent to $52.22 amid rumors about the San Francisco company's adoption of OpenStack.

Up: Yelp, Electronic Arts (ERTS), Tesla, SunPower (SPWRA), Ruckus, Netflix (NFLX), Salesforce, HP, Splunk, Symantec, Facebook, SanDisk, AMD, SolarCity, Cisco, Zynga, Applied Materials, Intel

Down: LinkedIn, Gilead, Adobe (ADBE), eBay, Yahoo, Apple, Pandora, Juniper, Google, Twitter, Intuit (INTU), NetApp

The SV150 index of Silicon Valley's largest tech companies: Up 1.88, or 0.13 percent, to 1,447.3

The tech-heavy Nasdaq composite index: Down 5.84, or 0.14 percent, to 4,023.68

The blue chip Dow Jones industrial average: Down 9.31, or 0.06 percent, to 15,875.26

And the widely watched Standard & Poor's 500 index: Down 5.54, or 0.31 percent, to 1,781

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.