Wall Street has seen a week-long losing streak this past week (not record breaking, to be sure, but not good or welcomed) that was largely remedied based on an acquisition and a supposition.
This year has been a banner year for M&A overall, and Berkshire Hathaway continued the trend with their biggest acquisition yet. Backed by CEO Warren Buffet, the company is set to buy Precision Castparts for $37.2 billion, the company’s biggest deal to date. Across the board, stock indices finished at least 1 percent higher on Monday.
After the Acquisition, The International Business Times reports, “The Dow Jones Industrial Average (INDEXDJX:.DJI) rose 192.55 points, or 1 percent, to 17,567.73. The Standard & Poor’s 500 index (INDEXSP:.INX) added 20.13 points, or 0.97 percent, to 2,097.84. And the Nasdaq composite (INDEXNASDAQ:.IXIC) gained 44.37 points, or 0.88 percent, to 5,087.19.”
Wall Street also had China’s current economy to thank, in part, for the hand up. According to Reuters, global markets were (are) hoping and looking for Beijing to provide a boost to their economy after it was reported that producer prices hit their lowest mark in six years. China is currently ranked as the No. 2 economy, and after the disappointing data, their market is in need of a stimulus. Stock market advisers and traders are looking to that, but not taking it to the bank, so to speak.
“It’s speculative to take anything away from today’s rally. Mostly you see it pronounced in the cyclical sectors… anything tied to China and the commodities’ complex,” explained Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
Of course, there are other matters of business that affected the jump on Wall Street: copper rebounded, oil prices jumped up, CVR is set to buy Rentech Nitrogen Partners, and Twitter shares went up just under 10 percent. Although these, among many other little things, helped with the rise on the Street nothing impacted it like the Berkshire Hathaway Acquisition. The M&A boom, of which this acquisition is a part of, shows the faith in the current economy and a hope for a better financial future.
Wall Street will continue to experience highs and lows, and while this climb from losses to profit is a good sign, Warren Buffett predicts time is what’s needed for higher stocks to be more permanent. When the oracle speaks, we must listen.
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