Liquidity Fuels M&A, Autos' Revival

The trappings of excess liquidity in the financial markets are so easy to spot on these merger Mondays. The Monday before Christmas '06 was no different. Investors awakened to news of about $60 billion in M&A activity -- no small portion of which was driven by private equity investment.

The deals boosted the market for a bit, but stocks couldn't hang onto their gains amid lingering worries about what happens if and when the liquidity dries up.

After trading as high as 12,491 early on, the Dow Jones Industrial Average closed down fractionally at 12,441.27 while the S&P 500 slipped 0.3% to close at 1422.48. The Nasdaq Composite had the worst day of the three major indices, slipping 0.9% to close at 2435.57%. ...