When companies are in the mood to buy other companies, it's usually a sign that corporate profits are in for an upswing. The mere rumor of such a merger had the Dow Jones Industrial Average over 14,000 again, up 0.35% on the day, while the S&P 500 rose 0.63% to a five-year high.
I'm not sure a potential merger between OfficeMax and Office Depot is exactly a sign of more retail acquisitions to come, but it's a start. The two companies have been crushed by online retailers with lower costs, and they're competing for a finite market. It makes all the sense in the world for the two to become one stronger company with fewer locations. The market is hoping this will lead to more consolidation in the industry, but only time will tell. This Fool isn't even certain a super office-retailer isn't doomed before it gets started.
Shares of Cisco have jumped 1.9% to a new 52-week high during trading today. CEO John Chambers has said his company won't pursue acquisitions in the U.S. because most of its cash bounty is in foreign countries. Cisco's stock has been stuck in neutral for about a decade now, and while this new high is a plus, I wouldn't expect it to drive the stock significantly higher in the near term.
UnitedHealth Group has led the laggards on the Dow today, falling 1.6% as potential government cuts put pressure on the company. The Centers for Medicare and Medicaid Services said it expects costs per person for Medicare Advantage plans to fall 2% in 2014. Final rates aren't out yet, but any cuts would eat into sales and margins for insurers, hence today's drop.
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Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool recommends Cisco Systems and UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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