The U.S. equity markets woke up on Tuesday morning, fresh from a long weekend, and immediately struck out for positive territory. By afternoon trading, the S&P 500 and Dow Jones hit fresh five-year highs, fueled by M&A buzz and positive expectations for a battery of economic indicators due to be released this week. The Dow hit a high of 14,044.48, and the S&P 500 hit a high of 1,528.09.
1) Merger and acquisitions activity has been a key factor in the broad market rally over the past few weeks. Highlighted by Warren Buffett’s acquisition of Heinz, the American-Airlines-US Airway’s merger, and the buzz on Tuesday that OfficeMax and Office Depot may unite, speculation is building that 2013 may bring with it a boom in M&A activity.
Such a boom could be taken to mean that businesses finally feel like recessionary headwinds have died down enough to safely pursue growth opportunities. M&A activity declined sharply in the wake of the recession as businesses focused more on survival and less on growth.