Mergers Could Help the Stock Market Going Forward
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During the last couple of sessions, it has become apparent that the U.S. stock market has been losing steam. However, it may not last forever. After all, corrections are inevitable, and it is not surprising that a pullback has come in response to concerns about the shape the economic recovery might take. Additionally, there is likely some profit taking going on. The encouraging news is that it appears that mergers and acquisitions are coming back into vogue.
While M&A activity is usually helpful, though, this week it may not do as much as some might hope. MarketWatch reports on some of the happenings that may limit the stock market this week:
U.S. stocks frequently rally on merger news. But the past weeks’ steep runs, which had lifted the benchmarks to new 2009 highs, likely encouraged some investors to cash out ahead of the Federal Reserve’s Wednesday interest-rate decision and the G20 meetings at the end of the week.
“Both the Fed and G20 meeting could have some sort of statement that applies to pulling back of global stimulus. If some investors are a bit unnerved by that, that could be a reason of attempted profit-taking,” Stovall said.
However, that is not to say that things will continue heading down. With companies sitting on some cash hoards, it is possible that M&A activity picks up later on this month or early next month. If this is the case, it could inject some confidence in the stock market, and provide a basis for the rally that has been happening for the last six months to continue.
With indications that the worst of the recession is over — and that the recession might be over altogether — the stock market is likely to continue to gather steam. However, there will probably be hiccups along the way.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
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