M&A optimism fuels rally

Stocks have held on to today’s gains deep into the New York trading day.

It’s been a very positive trading session on the New York Stock Exchange today, as more mergers and acquisitions news encouraged investors to look past evidence that the US economy has been slowing.

M&A activity has been brisk in recent weeks, added to by today’s announcement that RF Micro Devices has agreed to purchase TriQuint Semiconductor in a deal worth $1.6 billion. Shares in TriQuint jumped 26% on the back of the news, while RF Micro climbed 20%. Also, Men’s Wearhouse upped its cash offer for Jos A. Bank Clothiers from $57.50 a share to $63.50 a share.

Optimism from these deals helped the S&P 500 push into positive territory for the year, hitting a record high of 1858.76. With half an hour to the close, the index was on track for a record close, trading at 1849.8, up 0.73% on the day. The Dow also made strong gains, adding 0.95% to 16,255.

Among the weak US data we’ve been seeing lately, housing has been an area that particularly seems to be losing momentum. More information will be available tomorrow with the release of  Federal house price data for December alongside Case-Shiller’s widely-followed home price index.

More crucial will be the release of the Conference Board’s consumer confidence index for this month. Despite all the indications of softness, consumer spirits seem to have held up, which is vital as high levels of consumer confidence should prop up consumer spending, which accounts for more than two thirds of US economic activity. 

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