Investors Continue Buying Spree

Stocks surged yesterday as another round of corporate takeovers prodded investors to continue a largely uninterrupted buying streak that has gone on for months.

The Dow Jones industrial average registered its 24th record close this year and the Standard & Poor’s 500-stock index came within striking distance of its record high.

Beyond the buyout news, a stronger-than-expected reading on consumer sentiment helped investors set aside some concern that higher gas prices would upend the economy’s smooth slowdown.

The latest takeover news, including deals involving marquee names like General Electric and Microsoft signaled that the enormous amount of liquidity that has lubricated global stock markets in recent months is still in good supply.

“The M.& A. activity and earnings seem to be holding up better than expected. I think you’re going to see more of this,” said Bill Dwyer, chief investment officer at MTB Investment Advisors.

The Dow rose 79.81 points, or 0.59 percent, to 13,556.53. The index set a new trading high of 13,558.48, having crossed 13,500 for the first time on Thursday.

Broader stock indicators also advanced. The Standard & Poor’s 500-stock index rose 10 points, or 0.66 percent, to 1,522.75, its highest level in more than six years. The index came within fewer than 5 points of its record close of 1,527.46, set in March 2000.

The Nasdaq composite index rose 19.07 points, or 0.75 percent, to 2,558.45.

While the week registered a number of mixed finishes for the major indexes, investors seemed unfazed by the mostly modest pullbacks. Bigger consolidations are not unusual given the string of gains in the last month in particular. For the week, the Dow rose 1.73 percent, while the S.& P. 500 gained 1.12 percent and the Nasdaq lost 0.15 percent.

Light crude oil rose 8 cents, to .94 a barrel, on the New York Mercantile Exchange.

Investors appeared unfazed by rising oil prices, instead focusing on corporations’ continued appetite for merger deals. G.E. is in talks to sell its plastics division to a Saudi Arabian industrial giant for about billion. Shares of G.E. rose 43 cents, to .96.

Microsoft struck an agreement to acquire the online advertising company aQuantive for about billion in cash, paying a premium after a rush of major online ad deals by its competitors in recent weeks. Shares in aQuantive soared .92, to .79, while Microsoft slipped 15 cents, to .83.

“I definitely think that the M.& A. activity is going to continue as long as rates are cheap. It’s been a really good bull run,” said Caroline Lee, co-manager of the Laudus International MarketMasters fund. “It’s a bit scary in the sense of how long this can continue but you have a lot of cautious forces out there as well,” she said, referring to concerns about inflation and a weakening dollar.

The buyout news came alongside favorable economic findings. The preliminary Reuters/University of Michigan index of consumer sentiment for May came in at 88.7. Wall Street had expected the reading would be unchanged from April at 87.1.

The mood of consumers remains important to the economy, as consumer spending comprises two-thirds of economic activity.

The report came amid record gasoline prices, which are averaging more than a gallon nationwide. Higher gas prices could dent consumer spending, particularly at retailers like Wal-Mart Stores, whose primary customers are often sensitive to increases at the pump.

The recent rise in oil prices helped send shares of energy companies higher. ConocoPhillips rose .60, to .85. Exxon Mobil advanced .46, to .26.

In other corporate news yesterday, Trump Entertainment Resorts rose .73, to .80, after the company, which operates casinos and hotels, said would-be suitors had shown interest. Trump, which last year hired Merrill Lynch to explore options, did not disclose the interested buyers.

Intuit rose .84, to .56, after the software maker said its third-quarter profit rose 23 percent. The forecast for fiscal 2007 profit outstripped Wall Street’s expectations.

Bonds fell as the market appeared to look past China’s announcement of an interest rate increase and a widening of the range at which the yuan can trade. A rising Chinese currency would make Chinese imports less competitive in the United States.

The 10-year Treasury note fell 12/32, to 97 20/32. The note’s yield, which moves in the opposite direction from the price, rose to 4.80 percent from 4.75 percent on Thursday.

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