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On Monday, the markets closed mixed with Nasdaq ending its eight day winning streak while other major indices edged slightly higher. Expectations that the Senate would pass the tax-cuts package helped the markets gain modestly.
 
The Dow Jones Industrial Average gained 0.2% to 11,428.56. The Standard & Poor's 500 rose 0.06 points to 1,240.46. The tech-laden Nasdaq Composite dropped 0.5% to 2,624.91. The CBOE Volatility Index (VIX) fell below 17, the lowest level since April 2010, indicating investor confidence is on the rise. On the New York Stock Exchange, advance decline ratio was in favor of the declining stocks as for every 7 stocks that advanced, there were 8 stocks on the declining side. Monday registered a lighter volume of trading.
 
US President Barack Obama had earlier declared that the Bush-era tax cuts extension was in the best interests of the economy. The tax cuts will extend unemployment benefits, apart from tax concession to all income groups for two more years, he said. It will also reduce Social Security taxes for a year. According to economists, the tax package will boost economic growth; which is why investors’ derive optimism from it. Thus expectations of the passing of the package in the Senate had created positive investor sentiment.
 
News of mergers and acquisitions flooded the markets from various quarters. Dell (NYSE:DELL) agreed to buy Compellent Technologies (NYSE:CML) in an all cash deal of $960 million. General Electric (NYSE:GE) plans to buy Wellstream (NYSE:WSHOY), a British oilfield company, in a deal of about $1.3 billion. Thermo Fisher Scientific (NYSE:TMO) announced it would buy Dionex (NYSE:DNEX) for $2.1 billion.
 
On a sectoral basis, energy and material stocks increased primarily due to optimism that China will not prevent growth and will not raise the interest rate. Key stocks like Chevron Corp (NYSE: CVX) and Caterpillar Inc (NYSE: CAT) moved up 1.5% each, while ArcelorMittal (NYSE:ML) and Posco (NYSE:PKX) both gained more than 2%.

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