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M&A or Individual Investors: What's Driving The Bulls?

Merger and acquisition activity is on a roll, but is it really what’s driving the market bulls? Brent McQuiston, Wealth Trust Arizona vice president, and Sam Stovall, Standard & Poor’s chief investment strategist, shared their insights on “Morning Call.”

“The M&A news has been tremendous,” Stovall said. “We’ve seen a 60% increase on a year-to-day basis, according to S&P’s Capital IQ study of M&A activity worldwide.” He also pointed to strong financials and consumer discretionary spending.

McQuistion said individual investors are primarily moving the markets, in addition to stock buybacks, mergers and institutional investors. “What we’ve seen in the market in the last five or six years is price-earning multiple contraction,” McQuistion said. “We’ve actually seen stocks on a relative basis become cheaper, even trading at these historic highs in the market.”

Stovall disagreed: “[There are] too many disbelievers on the sidelines with cash and now they’re getting anxious, wondering if they should even come in this late.”