The "shrinkage" in the supply of stocks because of M&A activity is a key factor to the recent rally generally, and Monday's advance specifically, Aaron Task says on The Real Story podcast.
The market cap of the U.S. stock market through the first four months of 2007 is set to shrink 4.3% by the end of the year based on stock-buybacks and new cash takeovers vs. fund flows and new stock offerings, Task says, citing the data of Trim Tabs. That pace of "shrinkage" so far this year is more than double that of 2006.
M&A activity was clearly the highlight of an otherwise sleepy session Monday, with Alcoa (AA Quote) offering some $27 billion for Alcan (AL Quote), which jumped nearly 35%. Alcoa's more-than-8% rally helped the Dow Jones Industrial Average secure its fifth-straight record close and 24th gain in the past 27 trading days, the longest such streak since 1927. ...
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| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
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| 10,328.89 | 1,102.47 | 2,211.69 | 35.46 |
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