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It should surprise no one who watches the ups and downs of Wall Street that a horse named Street Sense would come from way behind to win the Kentucky Derby. The week ahead looks like it will put everyone's street sense to the test as a louder chorus of market watchers use the word "caution" when it comes to buying stocks.
Stocks wrapped up another record week as potential merger deals pushed the major markets higher. "The market responded very well this week to the raft of mergers and acquisitions announcements and private equity deals," said Quincy Krosby, chief investment strategist at The Hartford.
Media stocks are cheap, so some big players in the industry are saying “Let’s make a deal.” This week's flurry of potential media mergers includes such heavyweights as News Corp., Dow Jones, Reuters and Thomson. Analysts say that the main driver behind the proposed combinations is that media stocks are relatively cheap, making companies ripe for picking.
Reuters Group appears willing to endorse a takeover offer from Canada's Thomson Corp., the Financial Times reported. Success or failure of the deal will depend on whether the two sides can convince directors of the Founders Share Company that Reuters' editorial integrity would not be compromised, FT said.
Electronic publisher Thomson reported a 65% jump in first-quarter profit and said it expects to announce a buyer for its education division at the end of the second quarter.
Private equity firms Kohlberg Kravis Roberts and Carlyle Group have joined the race for the text book publishing unit of Canada's Thomson, the Times of London reported on Monday.
Mergers and acquisitions activity was brisk on Monday, giving stocks a lift as M&A deals spanned several industries, including energy, and added to optimism about the prospects for growth in both corporate profits and the U.S. economy.
Stocks closed solidly higher as investors took encouragement from more than $10 billion of announced acquisitions. "We think the one-day drop of a week or so ago was way overdone," Bob Turner, chief investment officer at Turner Investment Partners, told CNBC. "The trend that's been in place over the last several years of an upward bias to the market is still in place."
The deal, subject to Triad shareholder approval, tops a $4.7 billion agreement announced six weeks ago for Triad to be purchased by CCMP Capital Advisors and Goldman Sachs Capital Partners, the private equity arm of Goldman Sachs Group.
Merger madness is gripping Wall Street this morning and stocks, so far, are ready to sprint higher at the open. European markets are trading higher, and Asian stocks rose overnight, with a weaker yen helping lift Japan's Nikkei more than 1.6%.
The Dow Jones Industrial Average closed fractionally higher, helped by strength in Wal-Mart and Boeing, but the broader market failed to gain traction.
Triad Hospitals has accepted a takeover bid from affiliates of CCMP Capital Advisors and GS Capital Partners in a deal worth about $4.7 billion, the company said on Monday
Junk bonds are known for being one of the riskiest investment vehicles available. It’s interesting to note then that $100 invested in 1987 in both the S&P 500 and the Bear Sterns Junk Bond Index would garner the same return – with less volatility. At the turn of the century, the S&P jumped during the dot-com boom, then crashed back to the same level as the junk bond market.