Stocks ended the week mostly higher as strong economic data, soothing comments from Federal Reserve Chief Ben Bernanke and continued M&A action kept buyers in the market.
The Dow Jones Industrial Average closed the week with gains of 1.7% while the S&P 500 rose 1.1%. Both indexes closed higher for the seventh straight week. Not so for the Nasdaq Composite, however, which ended the week with a modest loss of 0.2%. The tech-focused index has declined two straight weeks.
On Monday, stocks started the week mixed as the latest batch of merger news failed to spark excitement among investors ahead of the release of key economic data.
DaimlerChrysler agreed to sell an 80% stake in its money-losing Chrysler division to private equity group Cerberus Capital Management for $7.4 billion, sending shares of the German automaker higher.
"The market has somewhat become like Pavlov's dog, waiting for some blockbuster merger deals to be announced," said Robert Pavlik, chief investment officer at Oaktree Asset Management.
On Tuesday, stocks closed mixed for the second straight session following tame inflation data and disappointing earnings reports from two major retailers. The consumer price index rose less than expected in April, the Labor Department said Tuesday morning.
"We had some economic numbers this morning that were blah at best -- certainly good from an inflation standpoint, but the economy is slowing," said Ted Weisberg, president of Seaport Securities.
Reuters Group and Thomson agreed on terms for a merger to create one of the world's largest financial news providers. The cash and stock transaction values Reuters at $17.2 billion.
The market's meandering ended on Wednesday, however, as the Dow logged triple-digit gains to close at a new high. Investors were encouraged by large investments disclosed by three well-known billionaire investors.
"It's amazing to me that the market is so resilient," Michael Metz, chief investment strategist at Oppenheimer. "Every pause is considered a buying opportunity."
Warren Buffett's holding company Berkshire Hathaway disclosed investments in railroads Union Pacific and Norfolk Southern and said it doubled its stake in health care giant Johnson & Johnson . Meanwhile, billionaire financier George Soros said he more than doubled a stake in Microsoft and hedge fund manager Eddie Lampert disclosed a purchase of 15 million shares of Citigroup, sending shares of the world's largest financial company up 4%.
Stocks ended a seesaw trading session Thursday slightly lower as strong economic data and encouraging Fed comments were offset by profit-taking and rising crude oil prices.
Fed Chairman Ben Bernanke said during a speech in Chicago earlier today that troubles in the mortgage market will not likely affect the broader economy, giving equities a lift earlier in the session.
Hewlett-Packard shares fell despite the company's 27% rise in quarterly earnings growth. Cost-cutting measures and strength in its PC and printer businesses helped boost its bottom line, HP said.
The markets moved broadly higher on Friday after new data indicated consumers remained upbeat on the economy. The Dow carved out yet another record while the S&P 500 crept toward a new all-time high.
Shares of aQuantive surged more than 75% after Microsoft said it will acquire the online advertising firm for $6 billion in cash, a significant premium of 85% to aQuantive's prior day closing price of $35.87.
CNBC confirmed that its parent company, General Electric, was in negotiations to sell its plastics business to Saudi Basic Industries for $11 billion.