Stocks closed broadly higher on Friday as the major markets hit new highs on takeover news and encouraging consumer data.
"Right now investor sentiment is surging to the optimistic side," said Chris Johnson, founder and chief investment strategist at Johnson Research Group.
The Dow Jones Industrial Average, the S&P 500 and Nasdaq Composite all rose about 0.5%. The S&P 500 closed about 5 points from an all-time closing high.
The Dow and S&P 500 ended higher for the seventh straight week, posting respective gains of 1.7% and 1.1%. The Nasdaq lagged, however, declining for the second straight week with a small loss of 0.2%.
"We've had nine months straight of upward rising markets, and with the exception of the February hiccup, we've really had kind of a straight shot up," said Keith Wirtz, chief investment officer at Fifth Third Asset Management.
"Technically speaking the market is probably a little extended, I wouldn't be surprised if there is headline risk in the stock market right now," Wirtz added. "But if you get a pullback in the stock market, we're encouraging our clients to be prepared to buy the dips."
Investors were encouraged by new economic data after the University of Michigan said its monthly consumer sentiment index rose to 88.7, above economists' consensus estimate of 87.
Buying was across the board with all 10 sectors tracked by S&P closing higher. The energy sector led the rally, gaining more than 1% for the second straight day on higher oil prices.
"The path of least resistance continues to be up," said Bill Nichols, senior managing director of equity trading at Bear Stearns. "You could have a pause in the move but with the oil patch trading higher, consumers trading up and the rails trading up, I think the next move continues to be up."
Shares of online advertisers got a boost after Microsoft said it will purchase online advertising firm aQuantive for about $6 billion in cash, paying a premium to catch up with major ad deals by its competitors over the past six weeks. The $66.50 a share purchase price represents an 85% premium to aQuantive's closing price on Thursday of $35.87. Shares of aQuantive surged more than 75%.
CNBC confirmed that Dow component General Electric is in talks to sell its plastics business to Saudi Basic Industries for $11 billion. News of the potential deal sent shares of CNBC's parent company higher.
Shares of Trump Entertainment surged after the casino and hotel operator said suitors have expressed interest in buying the company. Trump, which hired Merrill Lynch last year to explore options, did not disclose who might be interested in making an acquisition.
And there are about 12 parties interested in buying the U.S drinks unit of Cadbury Schweppes , in a deal which could be worth $16 billion, Reuters reported. A deal would put beverage brands such as Dr. Pepper, 7-Up and Snapple into private hands.
Dow component Verizon Communications was upgraded to buy from sell by Citigroup, which also increased its price target on the stock to $48 from $33. Citigroup believes Verizon's struggling wireline business should begin to recover next year.
Another Dow component, IBM , also rose after UBS lifted its price target on the world's largest technology services company to $124 from $118. The brokerage, which reiterated its buy rating on the stock, noted that the company believes emerging markets and prospects for a rebound in hardware will be long-term growth drivers.
Shares of Intuit rose after the software maker said late Thursday that third-quarter profit climbed 23%. Quarterly sales surpassed $1 billion for the first time. The company also forecast fiscal 2007 profit above Wall Street projections.
New York light sweet crude futures rose above $65 a barrel on persistent concerns that U.S. refiners are not producing enough gasoline to meet peak summer demand following more reports of problems at refineries.
Treasury prices fell, sending yields higher.
Europe Holds Onto Gains
In Europe, FTSE-100, the Paris CAC-40 and the Frankfurt DAX all rose, with deals still the talk of trading floors.
Looking to deals on the continent, private equity fund Permira is discussing purchasing another 24% of fashion house Valentino, Reuters reported, citing a source. The battle for Valentino is heating up, with Carlyle yet to decide on a $3.61 billion takeover offer for all of Valentino, Reuters said.
And Austrian steelmaker Voestalpine raised its offer for rival Beohler-Uddeholm to 73 euros a share ($99) from 69 euros a share, about 3.7 billion euros ($5 billion) in total. Shares of Voestalpine gained in Vienna, while Boehler-Uddenholm shares were suspended.
Meanwhile, British Airways sank after reporting that profit for the fiscal year ended March fell 13.3% from the same quarter a year ago. The carrier also said employees broke price-fixing laws in relation to fuel surcharges.
Asia Broadly Lower; Mining Stocks Hamper Australia
Asian markets were mostly lower, as a slide in base metals prices hurt mining stocks and chip stocks struggled in South Korea.
Tokyo's Nikkei 225 Average closed 0.57% lower as consumer credit firm Credit Saison and broadband service provider Softbank lost ground. Recent high-flyer Nippon Steel also sank as investors took profits.
In South Korea, falls in Samsung Electronics and Hynix Semiconductor pushed the Kospi Index down 0.2%.
And Australia's S&P/ASX 200 Index lost 0.8% as mining giant BHP Billiton and fellow global miner Rio Tinto fell. Worries about oversupply in China, the world's top metals consumer, had knocked copper to a six-week low on Thursday.
China's Shanghai Composite Index slipped, unable to sustain a brief foray into positive territory as investors grew concerned the government may take action to cool the economy.
Hong Kong blue chips fell, tracking weaker Shanghai-listed stocks, as the prospect of further monetary tightening by China sent most stocks lower, with commodity plays especially hard hit.