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 started 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 US$7.4 billion.
The transactions continued through the week as Reuters agreed to a US$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 US$6 billion.
The Dow Jones Industrial Average of blue chips spiked 1.73 percent 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 percent to end Friday 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 percent 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 US 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 feeling on Wall Street right now is that one doesn't want to be short either of individual stocks or the entire market during this tsunami of deal announcements," said Frederic Dickson, a market analyst at Davidson & Co.
"The market seems to be caught like a deer in the headlights by the mind-numbing flow of private equity transactions," Dickson said.
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 percent 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.
"People might also stress if gasoline prices are skyrocketing as we're approaching the beginning of the driving season," Pado added, referring to the approach of summer when Americans take to the nation's highways en route to holiday hot spots.
Some analysts are worried that spiking gasoline prices, which hit record highs in the past week above three dollars a gallon, could dent consumer spending, a key economic driver which accounts for some two-thirds of all US economic growth.
As stocks rose to new highs, some analysts wondered how much steam was left in the market.
"Momentum clearly seems to be on the market's side, but in some cases valuations of individual stocks are getting stretched. Overall valuation, however, still suggests that the market can move higher over time," observed Gregory Drahuschak, a market analyst at Janney Montgomery Scott.
In the week ahead, most analysts expect the US government to report that new home sales rose slightly to an annualized rate of 860,000 properties last month from March's 858,000 sales pace.
A separate report on existing home sales due to be released by the National Association of Realtors is anticipated to show a slowdown in sales to a 6.1 million unit annualized clip from a prior reading of 6.12 million homes.
New orders for durable goods are expected to slow to a one percent growth spurt last month from a prior gain of 3.7 percent.
Bond prices ended lower for the week.
The yield on the 10-year Treasury bond rose to 4.804 percent from 4.670 percent a week earlier while the 30-year bond yield increased to 4.957 percent against 4.849 percent.
Bond yields and prices move in opposite directions.
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