There looks to be much to give thanks for on Wall Street this season, as foreign investors continued to pour money into U.S. markets, private equity deals continued to fuel a red-hot mergers-and-acquisitions spree, and the stock market showed signs of a year-end rally.
The Treasury reported that international investors increased their holdings of U.S. stocks and bonds by more than $100 billion in September, a monthly record. The purchases helped to boost the value of the dollar against both the euro and the yen.
Foreigners weren't the only ones buying up shares in U.S. companies, however. Koch Industries kicked off the week by announcing it would pay $13.2 billion for Georgia-Pacific Corp., a deal that would make Koch the country's largest private company. The price represented a premium of nearly 40 percent over what the paper-product maker's shares were trading at the week before.
Then came the news from Knight Ridder, the nation's second-largest newspaper chain, that it would put itself up for sale, at the urging of its largest shareholder. At the same time, OfficeMax came under pressure from its largest shareholder, a hedge fund, to put itself up for sale.
In the red-hot market for satellite companies, Europe's largest player, SES Global, was turned down on its preliminary offer of $1.1 billion for Blackstone-controlled New Skies Satellites Holdings, the Wall Street Journal reported. And Allergan offered $3.2 billion for Inamed, a maker of obesity treatments and wrinkle-reducing products, hoping to beat out a $2.6 billion offer from Medicis Pharmaceutical.
The market for newly issued shares also got a boost after shares in Under Armour, the Baltimore maker of athletic apparel, rocketed from $13 to $31 on their first day of trading before closing at $25.30.
Adding to all this frothy deal activity were government reports showing a healthy rebound in retail sales and industrial output for October, suggesting that the ill effects of hurricanes Katrina and Rita were temporary. Wal-Mart reported early signs of a joyous holiday season, while General Electric perked up the market by raising its earnings forecast and adding $10 billion to its share buyback program. News that Google had topped $400 per share sparked a rally in tech stocks.
By week's end, both the Standard & Poor's 500-stock index and the Nasdaq composite index closed at their highest levels since the summer of 2001, with the Dow Jones industrial average closing at 10,766, within spitting distance of breaking even for the year.
All this was good news for investors, but even better news for Wall Street executives, who can look forward to big increases in year-end bonuses. Options Group, a New York headhunter, expects total pay packages to rise about 20 percent for the year.