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M&A Deals Alive and Well – and Dishing Out Huge Profits – Money Morning

Deal making is back on Wall Street – in a big way.

Mergers had been nearly non-existent for nearly six years in the wake of the financial crisis as global economic uncertainty, heightened scrutiny of corporate boards, high unemployment and the housing market bust had put a damper on M&A deals.

But 2013 has begun with a flurry of deal making, with $160 billion worth of merger activity thus far, the most at this point in the year since 2005, according to Dealogic.

And the stellar start to the markets this year – the S&P gained 6.6% in January and the Dow is quickly approaching its all-time high – suggests deal making will heat up in the months ahead.

The latest M&A deals come at a time of historically low financing costs, renewed corporate confidence, and companies flush with stockpiles of cash. In this climate, companies are seeking growth through deals and see them as a way to expand while appeasing anxious shareholders.

“The dam is burst. The forces were too powerful to hold back forever,” James B. Lee,
vice chairman of JPMorgan Chase & Co. (NYSE: JPM), told The Wall Street Journal.

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Stock Market Today: Wall Street Reacts to State of the Union Speech – Money Morning

The stock market today (Wednesday) shrugged off U.S. President Barack Obama’s State of the Union speech in which he urged Congress to take steps to strengthen the economy.

In early afternoon trading, the Dow Jones Industrial Average was off 38 points, the Standard & Poor’s 500 Index was up 1 and the Nasdaq rose 7.

The tepid reaction to the president’s speech is not unusual. Historically, most presidential addresses move markets by less than 1% the day after a speech, with the average move just 0.15%, according LPL Financial’s Jeff Kleintop.

Whatever the Dow does Wednesday, expect the benchmark to soon hit an all-time high. The index is just 1% off the record 14,165, set in 2007. Since 2009, stocks have soared some 127%, with pullbacks within each month. So it looks like it may be March before we reach a record high, but it’s coming.

A lackluster retail sales report from the Commerce Department didn’t provide any stimulus to the stock market today. U.S. retail sales rose a paltry 0.1% in January as an increase in payroll taxes left consumers with less disposable income.

“The payroll tax increase is having some impact on spending here. It looks like maybe momentum is not necessarily carrying forward into the first quarter,” Jefferies economist Thomas Simons told Bloomberg News.

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