Dow scales new peaks as merger mania persists

Dow scales new peaks as merger mania persists
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First Published: Sat, May 19 2007. 04 34 AM IST
Updated: Sat, May 19 2007. 04 34 AM IST
New York: The leading Dow Jones Industrial Average stock index scaled fresh record peaks in the past week extending its months-long upward trajectory as a flurry of new mergers boosted Wall Street’s optimism.
The deal-making frenzy kicked off on Monday with news that German-US auto giant DaimlerChyrsler had agreed to sell its loss-making Chrysler unit to private equity firm Cerberus Capital Management for 7.4 billion dollars (Rs30,300 crore).
The transactions continued through the week as Reuters agreed a 17.2-billion merger with Canadian-based Thomson, the Blackstone private equity group moved to buy Alliance Data Systems and Microsoft on Friday snapped up a digital marketing company for six billion dollars.
The Dow Jones Industrial Average of blue chips spiked 1.73% for the week to end Friday at a record 13,556.53 points on the back of the deal-fueled week.
The broad-market Standard & Poor’s 500 index soared 1.12% to end at 1,522.75, falling within reach of its all-time high of 1,527.46 set in March 2000.
The tech-rich Nasdaq composite, however, lost 0.14% for the week to 2,558.45.
The week’s economic news was more mixed, inflation appeared to cool and US housing starts showed a surprise rebound, but a leading gauge measuring economic momentum delivered a weaker-than-expected reading.
The week ahead will not give investors too much economic fat to chew.
There are only a couple of indicators due for release aside from two separate updates on new homes sales and existing property sales.
The Dow has streaked upwards on the deal flows even as the world’s largest economy has slowed markedly in recent months, moderating to a 1.3% annualized growth spurt in the first quarter amid a persistent housing market slump.
“Investors would like to see a bit of bottoming in the housing market,” said Marc Pado, a market analyst at Cantor Fitzgerald.
In the week ahead, mosts analysts expect the government to report that new home sales rose slightly to an annualized rate of 8,60,000 properties in April from March’s 8,58,000 sales pace.
New orders for durable goods are expected to slow to a 1% growth spurt in April from a prior gain of 3.7% .
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First Published: Sat, May 19 2007. 04 34 AM IST