While many investors primed their sump pumps last week, the earnings spigot let loose a deluge of good earnings that lifted stocks to new levels.

A triple play of solid earnings, strong retail sales data, and merger activity boosted stocks on Monday. Despite soggy weather, the sun shone on equities, with the Dow jumping 108 points, and the Nasdaq and S&P 500 each rising over 1.1%.

Stocks continued to float upward on Tuesday. Tame inflation data and good earnings reports pushed the Dow to near-record territory while the Nasdaq dipped into the red. Wednesday proved to be another mixed market, with the Dow reaching a fresh closing high, while tech earnings continued to weigh on the Nasdaq.

Following sharp overnight drops in the Asian markets, stocks got off to a shaky start on Thursday before recovering. The major indices ended narrowly mixed, with a mere 4.8-point gain sufficient to send the Dow to a second consecutive record close. On Friday, the Dow had a triple-digit gain and hit a new highwater mark as stocks advanced broadly on the strength of bellwether corporate earnings.

Whether economic data will put a damper on the rally will depend on announcements including consumer confidence and existing home sales tomorrow, durable goods, new home sales, and the Beige Book on Wednesday, and the employment cost index, preliminary first-quarter GDP, and consumer sentiment on Friday.

The steady flow of corporate earnings continues. Corporations posting reports include Boston Scientific, Kimberly Clark, and Texas Instruments today, Amazon, AT&T, CME, DuPont, and JetBlue tomorrow, Apple, Boeing, Conoco Phillips, Colgate-Palmolive, and PepsiCo on Wednesday, 3M, Exxon Mobil, Ford, and Microsoft on Thursday, followed by Burger King, Chevron, Goodyear, and Waste Management on Friday.

Stay market-tuned and Foolish!

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Foolish quiz
1. True or false: The Dow broke the 13,000 level in intraday trading on Friday.

2. True or false: Caterpillar (NYSE:CAT) was the biggest percentage gainer in the Dow on Friday.

3. True or false: News of a takeover of Sallie Mae (NYSE:SLM) overtook shares of First Marblehead (NYSE:FMD).

4. Which company's shares hit a 52-week high after reporting earnings: Citigroup (NYSE:C) or Coca-Cola (NYSE:KO)?

5. Which Internet search engine reported disappointing earnings: Google or Yahoo?

6. True or false: Subprime mortgage woes significantly damaged earnings at JP Morgan Chase.

7. Which exchange posted stronger earnings: CBOT or Nasdaq?

8. Which drug company's earnings beat expectations: Pfizer or Schering Plough?

9. Which company's earnings beat expectations: IBM or Xerox?

10. Customers of which tax services provider received an IRS extension: H&R Block or Intuit?

1. True. The Dow hit a high of 13,035.77 on Friday before dropping back to close at 12,961.98. Make sure your champagne's on ice.

2. False. Honeywell's 4.8% gain eclipsed Caterpillar's 4.7% increase. Both companies reported quarterly earnings and raised their full-year earnings outlooks. Honeywell announced a 21% increase in profit, however, while Caterpillar posted a 2.9% decline in profit because of a soft domestic housing market and disappointing truck engine sales, while reporting growth outside North America.

3. True. Monday's news that student lender Sallie Mae will be acquired for $25 billion by an investor group led by J.C. Flowers sparked a 22.1% sell-off in First Marblehead. J.P.Morgan Chase, and Bank of America, members of the buyout consortium, are among First Marblehead's largest customers.

4. Coca-Cola. Coke investors had something to smile about when shares closed on Tuesday at a new 52-week high of $51.57 after the company reported a 14% jump in first-quarter earnings on a 17% jump in revenues. Shares continued to show frothiness with successively higher closes the remainder of the week. Citigroup shareholders could also manage to grin as shares advanced 2.6% following its announcement of a better-than-expected 11% drop in first-quarter profit.

5. Yahoo. On Tuesday, Yahoo announced an 11% tumble in first-quarter profit, a disappointing result that looked even bleaker when two days later Google reported an impressive 69% surge in profit.

6. False. JPMorgan Chase reported an impressive 55% growth in first-quarter profit, with strength across its business units. Although it increased its reserves for subprime mortgage losses, the bank deemed its exposure "manageable." 

7. CBOT. The Chicago futures exchange reported a whopping 58% increase in first-quarter profit, with strength across operations, while the Nasdaq reported a 1.7% increase.  

8. Schering Plough. Profits climbed 55% for Schering Plough in the first quarter because of strength in prescription-drug sales. Pfizer wasn't feeling as well, suffering a 17% drop in first-quarter profit, hurt by disappointing sales of a diabetes drug and one-time charges. Pfizer also reduced its full-year estimates in response to the early loss of patent exclusivity for its second-best-selling drug, Norvasc, which treats high blood pressure and angina. 

9. Xerox. The company reported a 17% increase in profit, beating expectations largely because of sales of service contracts and supplies. IBM couldn't quite copy such success, instead posting an expected 8% rise in profit.

10. Both. Regardless of one's tax preparation service, the IRS granted extensions until April 26 for those whose homes, businesses, or transportation services were disrupted by last week's nor'easter. However, Intuit customers did receive a specific filing extension from the IRS, to April 19 because of glitches in the company's TurboTax electronic filing system caused by extremely high volume. No volume delays were reported for users of H&R Block's TaxCut filing service. Shares of both companies gained last week, with Intuit rising 3.3%, and H&R Block increasing 7.8%, helped by its announcement on Friday that it will sell its subprime lender, Option One Mortgage, to Cerberus Capital Management.


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

3M, Coca-Cola, and Pfizer are Motley Fool Inside Value picks. Amazon, JetBlue, and Yahoo! are Motley Fool Stock Advisor selections. JPMorgan Chase is a Motley Fool Income Investor pick, while First Marblehead is a Motley Fool Hidden Gems recommendation. Whatever your investing style, the Fool has a newsletter for you.

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. She serves as an arbitrator for the New York Stock Exchange and the NASD. The Fool has a disclosure policy.