There WILL Be a Quiz: Weekly Markets Recap

If Wall Street had voted, Ben Bernanke would have topped the Most Beautiful People list released by People magazine last week.

The Fed Chief proved that even geeks (sorry, Mr. Chairman!) can sometimes prove to be the most popular. But just like status, stocks can be fickle.

Equities closed lower at the beginning of the week as the Dow was knocked off its six-year high pedestal, achieved the week of 04/17/06. Mixed earnings and a declining dollar weighed in on Monday. Despite better earnings reports, unexpectedly strong consumer confidence and housing numbers took their toll on Tuesday. The Dow, however, regained its composure and its six-year high crown on Wednesday, helped by declining oil prices. The market shrugged off strong durable goods and new housing reports.

With the markets behaving like capricious teenagers gossiping about interest rate and inflationary fears, Bernanke's Congressional testimony on Thursday shoved equities into positive territory. His remarks elevated hopes that the Fed would soon ease its rate hikes, and the major indices rose from losses earlier in the day, caused in part by China's surprise decision to boost its key interest rate. Markets closed mixed on Friday, because of anxiety over disappointing earnings from Microsoft (NASDAQ:MSFT) and heightened global tension.

Economic dance cards will fill up this week as a slew of new data arrives. Core personal consumption for March and the ISM manufacturing index for April are due today, auto sales tomorrow, factory orders on Wednesday, retail sales and first-quarter productivity growth on Thursday, and April employment numbers on Friday.

On the earnings front, Humana reports today, Verizon tomorrow, CIGNA, Procter & Gamble, and Whole Foods Market on Wednesday.

Stay market-tuned and Foolish!

Capital Markets Summary

Foolish Quiz:
1. This index racked up the highest percentage gain in April:

__ (a). The Dow
__ (b). The Nasdaq
__ (c). The S&P 500

2. Microsoft was the S&P 500's biggest loser on Friday.

__ True __ False

3. Last week's earnings winners included:

__ (a). AT&T (NYSE:T)
__ (b). Harrah's Entertainment (NYSE:HET)
__ (c). Level 3 Communications
__ (d). Xerox

4. This company remained unpopular despite reporting record earnings:

__ (a). ExxonMobil (NYSE:XOM)
__ (b). Lucent Technologies
__ (c). Moody's (NYSE:MCO)
__ (d). XM Satellite Radio Holdings (NASDAQ:XMSR)

5. Last week's dealmakers did not include:

__ (a). Cendant
__ (b). LondonStock Exchange
__ (c). McClatchy
__ (d). WashingtonMutual

6. The United States was a wallflower during many of the world's largest initial public offerings in 2005.

__ True __ False

7. Sectors benefiting the most from Bernanke's testimony included:

__ (a). Financials
__ (b). Gold
__ (c). Semiconductors
__ (d). Utilities

8. If you're popular with certain traders, you might be asked to toss back a martini with them at the Stock Exchange Luncheon Club.

__ True __ False

9. As an investor, you most likely wish to be a homeowner in:

__ (a). Dallas
__ (b). Houston
__ (c). New York
__ (d). Seattle

10. The next hottest trend in reality television may feature cars.

__ True __ False

Answers:
1. (a). The Dow led the three major indices, rising 2.3% in April. The S&P 500 grew 1.2%, and the Nasdaq declined 0.7%.

2. True. Mr. Softy had a bad day. Shares fell more than 11%, to a new 52- week low of $24.15, after the company missed third-quarter estimates by a penny, announced increased expenditures to combat the likes of Google, and issued a warning for this quarter.

3. (a), (b), (c). Shares of AT&T rose 0.3% on Tuesday after it reported a 63% surge in first-quarter profits, reflecting its first combined results since its acquisition by SBC. Hooray for Harrah's, as its first-quarter profit soared 75%, boosted in part by its acquisition of Caesars Entertainment last year. The casino operator's shares jumped 2.2% on Thursday. Level 3 spiked 8.1% on Tuesday, following its report of a 28% revenue increase and a narrower-than-expected first-quarter loss. Xerox could not copy these results; its shares fell 5.4% on Monday after it announced that equipment sales dropped 4% and total revenue fell 2%.

4. (a). Exxon's record first-quarter profit of $8.4 billion could not stave off knives thrown at it by Wall Street -- which was nevertheless disappointed that those profits weren't higher -- or by Capitol Hill, which is putting oil companies under increased scrutiny amid soaring gas prices. Shares declined 1.1% on Thursday. Other earnings losers included Lucent, which fell 1.3% on Tuesday; Moody's, which declined 12% on Wednesday; and XM, which lost 5.5% on Thursday.

5. (b). The London Stock Exchange said on Monday that it had not been approached by the NYSE Group about a potential offer. The latter may have been busy in other talks; NYSE Group acknowledged on Wednesday that it's in discussions with other exchanges, although it did not disclose names. Meanwhile, Cendant announced on Monday that it is reviewing unsolicited bids for its travel division, Washington Mutual also said on Monday that it will purchase Commercial Capital Bancorp for approximately $983 million to strengthen its California real estate lending business. McClatchy reported Thursday that it will sell four Knight Ridder newspapers to MediaNewsGroup for $1 billion.

6. True. In testimony before Congress last week, the New York Stock Exchange's chairman cited litigiousness and regulatory hurdles to explain why the U.S. only led one out of the world's 25 largest stock offerings last year. The same Ernst & Young study cited showed that the U.S. remains the leader in capital raised and the number of IPOs.

7. (a), (c), and (d). The Fed chief's remarks ignited sectors typically hurt by higher interest rates. On Thursday, the Dow Jones Financials Index rose 1.3%, the Dow Jones Utilities Index gained 1.2%, the Philadelphia Semiconductor Sector index increased 1.3%, and the Amex Gold Bugs Index dropped 3.9%.

8. False. The New York Stock Exchange's historic club closed its doors Friday, because of declining business and a changing culture at the now publicly owned Big Board. A visit to the hot dog vendor, and perhaps a pretzel, will now have to suffice.

9. (a), (b), (d). According to a survey by The Wall Street Journal, any remaining strength in the housing market is shifting to those areas left out of the recent boom. Joining New York on the weak side are Boston, Los Angeles, Miami, Minneapolis, Philadelphia, and San Francisco as they experience increasing inventories amid declining job growth.

10. True. Putting its own spin on reality television, Ford announced Wednesday that it plans to launch a program in which contestants develop automobile concepts in conjunction with Ford designers. After the company's shares reached a new three-year low Monday when analysts cut estimates due to poor first-quarter earnings, could that be the ticket needed to drive ahead?

Scoring:

• 8-10 correct: Foolishly impressive.
• 6-7 correct: Almost Foolish.
• 1-5 correct: OK, but just barely.
• 0 correct: Keep reading the Fool, and watch your scores improve!

Whole Foods and Moody's are Stock Advisor picks, Microsoft and Cendant are Inside Value picks, and XM and the NYSE Group are Rule Breakers picks.

Fool contributor S.J. Caplan, a former vice president and assistant general counsel of Goldman Sachs and former vice president and derivative finance specialist at Lehman Brothers, owns shares of Google and NYSE Group. She serves as an arbitrator for the New York Stock Exchange and the NASD. The Fool has a disclosure policy.