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.
Napoleon Osorio is proud of being the first taxi driver to have accepted payment in bitcoin in the first country in the world to make the cryptocurrency legal tender: El Salvador. He credits Salvadoran President Nayib Bukele’s decision to bank on bitcoin three years ago with changing his life. “Before I was unemployed... And now I have my own business,” said the 39-year-old businessman, who uses an app to charge for rides in bitcoin and now runs his own car rental company. Three years ago the leader of the Central American nation took a huge gamble when he put bitcoin
Demand for artificial intelligence (AI) chips should spur growth for the semiconductor industry over the next few years, the CEO of a major supplier to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said, dismissing concerns that investors had misjudged the pace and extent of spending on AI. While the global chip market has grown about 8 percent annually over the past 20 years, AI semiconductors should grow at a much higher rate going forward, Scientech Corp (辛耘) chief executive officer Hsu Ming-chi (許明琪) told Bloomberg Television. “This booming of the AI industry has just begun,” Hsu said. “For the most prominent
PARTNERSHIPS: TSMC said it has been working with multiple memorychip makers for more than two years to provide a full spectrum of solutions to address AI demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it has been collaborating with multiple memorychip makers in high-bandwidth memory (HBM) used in artificial intelligence (AI) applications for more than two years, refuting South Korean media report's about an unprecedented partnership with Samsung Electronics Co. As Samsung is competing with TSMC for a bigger foundry business, any cooperation between the two technology heavyweights would catch the eyes of investors and experts in the semiconductor industry. “We have been working with memory partners, including Micron, Samsung Memory and SK Hynix, on HBM solutions for more than two years, aiming to advance 3D integrated circuit
TECH RACE: The Chinese firm showed off its new Mate XT hours after the latest iPhone launch, but its price tag and limited supply could be drawbacks China’s Huawei Technologies Co (華為) yesterday unveiled the world’s first tri-foldable phone, as it seeks to expand its lead in the world’s biggest smartphone market and steal the spotlight from Apple Inc hours after it debuted a new iPhone. The Chinese tech giant showed off its new Mate XT, which users can fold three ways like an accordion screen door, during a launch ceremony in Shenzhen. The Mate XT comes in red and black and has a 10.2-inch display screen. At 3.6mm thick, it is the world’s slimmest foldable smartphone, Huawei said. The company’s Web site showed that it has garnered more than
RSS