Strong corporate earnings last week uncorked a new Dow milestone.

Following the prior week's run-up, stocks rested on Monday, despite a wave of merger activity and good earnings. Prices fell modestly across the board, with the Dow dropping 42 points, even though it had hit an intraday record high. While the broader market remained uninspired, the Dow reached another intraday record high on Tuesday, before weak home sales and consumer confidence figures brought stocks lower.

The party arrived on Wednesday, when the Dow broke the 13,000 level within the first several minutes of trading on strong corporate earnings. Stocks gained broadly, and the blue-chip index built on gains and closed 134 points higher.

On Thursday, a slim gain in the Dow pushed it to yet another record, while the broader market remained stalled amid mixed earnings reports. Friday's action proved choppy as good tech earnings and a solid consumer confidence report competed with weak economic growth figures. While the Dow notched another closing record with a mere 15-point gain, the S&P 500 slipped fractionally, and the Nasdaq ended up by a little more than two points.

April employment figures, due Friday, may prove sobering. Other economic data scheduled for release includes personal income, consumption, and construction spending today, auto sales and pending home sales tomorrow, factory orders on Wednesday, and preliminary first quarter productivity and the ISM non-manufacturing index on Thursday.

Meanwhile, the earnings season parties on. Corporations reporting include Anadarko Petroleum, Kellogg, Loews, and Verizon today; MetLife, Procter & Gamble, and Yum! Brands tomorrow; Blockbuster, MasterCard, and Sprint Nextel on Wednesday; General Motors, CBS, Starbucks, and Unilever on Thursday; and Eastman Kodak, Washington Post, and Weyerhaeuser on Friday.

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Capital Markets Summary

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Foolish Quiz
1. True or false: 3M (NYSE:MMM) helped lead the Dow above 13,000 on Wednesday.

2. True or false: The S&P 500 hit a new all-time high last week.

3. Alcoa (NYSE:AA) announced the following news last week:
(a) Strong quarterly earnings
(b) Strategic options evaluation
(c) Both

4. True or false: Shares of (NASDAQ:AMZN) hit a 52-week high after the company reported earnings.

5. True or false: Shares of Apple (NASDAQ:AAPL) hit an all-time high after reporting earnings.

6. True or false: Sales of Vista point to a sunny outlook for Microsoft.

7. ABM Amro agreed to be acquired by:
(a) Bank of America
(b) Barclays
(c) Royal Bank of Scotland

8. In the auto sector:
(a) Ford's quarterly loss narrowed
(b) Goodyear swung to a loss
(c) Toyota topped GM in first-quarter sales
(d) all of the above

9. True or false: Transports moved the market higher last week.

10. True or false: Dow Chemical's profit report pushed the Dow higher on Thursday.

1. False. 3M was the lone decliner Wednesday when the blue-chip index broke the 13,000 barrier. The Post-it maker posted its own largest one-day gain in almost a year when shares rose 4.5% the next day, thanks to a 52% jump in first-quarter profit.

2. False. The S&P 500 remains 33.39 points shy of its 1,527.46 high, hit on March 24, 2000.

3. (b). On Wednesday, Alcoa made news by disclosing that it's considering canning its packaging, electrical, and automotive castings businesses, and should conclude its evaluation by year-end. This announcement by the company, which kicked off earnings season three weeks ago, helped put a 5.1% shine on its shares.

4. True. Late Tuesday, Amazon posted a near doubling of its first-quarter profit, helped by restrained spending and a lower tax rate, and issued stronger guidance. Shares hit a new high of $57.18 on Wednesday, to be surpassed by Friday's high of $63.84. For the week, shares gained 39.3%.

5. True. Shares rose 4.9% on Thursday after Apple chewed off an 88% increase in quarterly earnings. Shares rose past $100 for the first time in regular trading hours to a fresh all-time high of $102.50.

6. True. Microsoft raised its guidance and posted a 65% jump in third-quarter profit late Thursday, thanks partly to solid sales of its previously disparaged new Windows Vista operating system.

7. (a), (b). On Monday, ABN Amro and Barclays announced an $88.4 billion merger agreement, which included a side agreement to sell its Chicago-based LaSalle Bank to Bank of America for $21 billion. Two days later, Royal Bank of Scotland announced that it will lead a consortium in a rival $98.6 billion offer.

8. (d). News driving the auto sector included the reduced quarterly loss at Ford, Goodyear's net loss and plans to expand production, and Toyota's continued trek to become the global auto leader, evidenced by its first-ever quarter of selling more vehicles worldwide than GM.

9. False. Weak earnings reports and conservative outlooks from transport companies such as Arkansas Best, Norfolk Southern, and Old Dominion led to a 1.6% decline in the Dow Jones Transportation Average for the week.

10. False. Shares of Dow Chemical fell 1% on Thursday after the company announced a 20% drop in first-quarter profit. By the way, even if the chemical company had blown past forecasts, it still wouldn't have moved the blue-chip index. Dow's not in the Dow.


  • 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!

MasterCard, 3M, and Microsoft are Motley Fool Inside Value picks. Starbucks and are Motley Fool Stock Advisor selections. Unilever, Dow Chemical, and Bank of America are Motley Fool Income Investor recommendations. Whatever your investing style, the Fool has a newsletter for you.

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