Merger talk is in the air and thoughts of corporate consolidation are likely to occupy investors' minds in the week ahead, as the earnings season winds down and traders look for fresh reasons to push the market higher.
Cable operator Comcast Corp's unsolicited US$50 billion takeover bid for media giant Walt Disney Co, a deal that would create the world's largest media company, stirred up speculation about a comeback in dealmaking and put Wall Street on watch for the next mega-marriage.
Unexpectedly strong quarterly earnings reports and heavy hints from Federal Reserve Chairman Alan Greenspan that interest rates are likely to remain low for some time to come have underpinned investor sentiment. But after the market's substantial climb over the past two months, concerns have mounted that most of this good news is already factored into current stock prices.
"You've gotten to a point now where it's hard to squeeze out much better earnings without a much stronger economy," said Rick Meckler, president of investment firm LibertyView Asset Management.
Merger and acquisition activity, he said, may help keep investors' interest in buying stocks piqued.
"People will be starting to look at who else can buy a competitor and grow from that."
In addition to the Disney deal, the world's top wireless operator, Vodafone Group Plc, and US rival Cingular have squared off for a US$30 billion-plus bidding war to gain control of AT&T Wireless ahead of a late Friday deadline.
That came on the heels of Bank of America Corp's bid for FleetBoston Financial Corp. late last month.
More deals of this kind mean corporate managements are more comfortable with their own business operations and feel that their companies' shares are fairly valued, said Jack Caffrey, equity strategist at J.P. Morgan Private Bank.
"It's indicative of a healthier overall financial and operating environment," Caffrey said. "That can translate into managements' willingness to spend more money on capital and, ultimately, spend more on labor."
While corporate America is expected to pick up the spending baton from consumers, whose shopping habits helped ease the pain of the latest economic downturn, some economists worry that sluggish employment growth could leave consumers with empty pockets.
On Friday, a surprisingly weak report on consumer sentiment from the University of Michigan helped send stocks into negative territory.
For that reason, weekly jobless claims figures will garner a bit of attention next week. Economists polled by Reuters estimate that about 353,000 Americans lined up for first-time unemployment benefits in the week ended Feb. 14, down from 363,000 in the previous week. The figures are due Thursday.
Industrial production and capacity utilization data for January are on Tuesday's economic calendar.
Reports on consumer and producer-level prices in January will likely get a yawn unless they diverge widely from expectations, analysts said, since Greenspan's comments reassured the financial markets that the Fed isn't ready to take back some of the stimulus that has helped the economy surge to its strongest levels in 20 years.
Technology companies and retailers stand out amid next week's corporate earnings reports. Both the world's biggest retailer, Wal-Mart Stores Inc, and the second-largest US discounter, Target Corp, are scheduled to issue their quarterly scorecards.
In the tech sector, No. 2 computer maker Hewlett-Packard Co, network storage gear maker Network Appliance Inc, chip equipment maker Applied Materials Inc and telecommunications equipment maker Ciena Corp have earnings on tap.
Results are also expected from farm machinery maker Deere & Co and natural gas producer and pipeline company Williams Cos Inc.
With fourth-quarter results already in from more than 400 of the companies in the Standard & Poor's 500 index, operating earnings have surpassed analysts' estimates by nearly 5 percent on average, according to data compiled by Reuters Research.
Investors have been busy pouring money into equities, with more than US$40 billion of net inflows into US stock mutual funds in January, according to a report by fund consultant Strategic Insight.
With the Dow brushing 32-month highs and other major indexes also up sharply in recent months, "valuations are on the higher side of fair," Caffrey said, adding that that could keep the market from embarking on a major rally.
A shortened trading week also could help keep stocks pinned in a narrow trading range, analysts said. US financial markets are closed on Monday in observance of the Presidents Day holiday.
For the week, the blue-chip Dow Jones industrial average rose 0.3 percent and the broad Standard & Poor's 500 index also finished up 0.3 percent. It was the second straight week of gains for the Dow and the S&P 500.
But the technology-packed Nasdaq Composite Index closed the week down 0.5 percent, marking its fourth straight week of declines.
Year to date, the Dow is up 1.7 percent, the S&P 500 is up 3.1 percent, and the Nasdaq is up 2.5 percent.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last