There WILL Be a Quiz: Weekly Markets Recap

The S&P 500 just couldn't clinch the title of Stock Index Idol. It kept getting the jitters during last week's overall shaky equity market performance.

Merger news and higher oil prices combined to produce a mixed market on Monday. The S&P 500 stole the limelight, crossing its all-time closing high in intraday trading before dropping back to close up more than two points, while the Dow dropped more than 13 points, and the Nasdaq gained more than 20 points.

Only the Nasdaq managed a small gain on Tuesday, as the Dow closed down slightly and the S&P 500 finished nearly flat, despite again trading above its record close in intraday trading. All three major indices declined modestly on Wednesday, reacting to former Fed head Alan Greenspan's warning of a coming pullback in Chinese equities.

On Thursday, stocks sank following an unexpectedly strong new-home sales report. The data eroded hopes of an interest rate cut later this year, and all three major indices hit sour notes, with the Nasdaq falling the hardest and dropping 1.5%. Friday's finale proved better, with stocks inspired by more dealmaking, closing solidly higher in thin trading prior to the holiday weekend. Still, no record deal emerged for the S&P 500; it closed the week just less than 12 points shy of its all-time closing high.

The stock market was closed yesterday in observance of Memorial Day. The major economic focus this week will be on the May employment report slated for publication Friday. Other data scheduled for release include consumer confidence today, preliminary first-quarter gross domestic product, and construction spending on Thursday, followed by the ISM manufacturing index, personal income and spending, consumer sentiment, and auto sales on Friday.

Corporations posting earnings include Borders today, Payless ShoeSource and TiVo tomorrow, and Costco, Dell, and Sears on Thursday.

Stay market-tuned and Foolish!

Capital Markets Summary

U.S. Equities

Commodities

Foolish Quiz

1. This index broke its seven-week winning streak:

(a) the Dow
(b) the Nasdaq
(c) the S&P 500

2. True or false: Archstone-Smith (NYSE:ASN) elevated the S&P 500 on Friday.

3. Which beverage company took a drink from the deal-bucket last week: Coca-Cola (NYSE:KO) or Pepsi (NYSE:PEP)?

4. Shares of which company jumped on news of a private buyout: Alcan (NYSE:AL) or Alltel (NYSE:AT)? 

5. True or false: The quarterly loss of Toll Brothers took a toll on its shares.

6. Which retailer reported the steepest drop in earnings:

(a) Barnes & Noble
(b) Dillard's
(c) Lowe's
(d) Target

7. Nasdaq reported the following:

(a) an acquisition
(b) good earnings
(c) poor earnings

8. Kirk Kerkorian has placed his latest roll of the dice on:

(a) Detroit
(b) Las Vegas
(c) neither

9. True or false: Dell will soon break from its direct sales model by teaming up exclusively with Wal-Mart.

10. True or false: Shares of News Corp., the parent of Fox Entertainment, which broadcasts American Idol, hit a high note last week.

Answers

1. (a), (c). Both the Dow's and S&P 500's seven-week winning streaks came to an end last week amid concerns about interest rates, China, and high valuations.

2. True. The apartment REIT's 8.02% advance was the largest gainer in the index on Friday. Archstone-Smith enjoyed its biggest jump in nearly seven years following an industry report that it might be acquired by real estate and construction firm Tishman-Speyer.

3. Coca-Cola. Coke announced on Friday that it agreed to acquire VitaminWater maker Glaceau for $4.1 billion, in a transaction viewed as helping it better compete with rival Pepsi in the noncarbonated drink market. Shares of Coke perked up 1.3%.

4. Alltel. Shares of the wireless operator jumped 6.7% on Monday following the news of its $27.5 billion purchase agreement by private equity firms. In other news from the land of deals, Canadian aluminum producer Alcan urged its shareholders late Tuesday to reject the $27.41 billion takeover bid by rival Alcoa, calling it inadequate as reports circulated on Wednesday that the company is in talks with BHP Billiton. Shares of Alcan rose 6% while those of Alcoa gained 3.7%.

5. False. Despite posting a 79% drop in quarterly profit on Thursday, shares of Toll Brothers rose 1% as investors cheered the Commerce Department's new-home sales report released the same day. The data revealed a 16.2% increase in April sales, the largest in 14 years.

6. (b). Among a mixed bag of retail earnings last week, Dillard's emerged the loser when it announced a 30% decline in quarterly earnings, coupled with a 5% drop in same-store sales. Next up the ladder, Lowe's posted a 12% drop in profit, blamed on the housing market and mixed weather. Barnes & Noble opened the book on a swing to a first-quarter loss, with member discounts tearing into profits while revenue rose 3%. Target came out on top, posting a better-than-expected 18% gain in first-quarter profit.

7. (a). While rival NYSE Euronext reported a pro forma first-quarter profit of $161 million last week, Nasdaq was busy adding to its collection of international exchange ownership. On Friday, Nasdaq, which still owns close to 30% of the London Stock Exchange, announced its agreement to purchase Nordic exchange operator OMX AB for $3.7 billion. Investor reception was anything but chilly, as shares rose 4.7% for the week.

8. Las Vegas. Shares of MGM Mirage soared 27.1% on Tuesday after news broke that Kerkorian, a 56% stakeholder in the company through his trading vehicle, is making a play for two of the company's landmark Vegas properties.  

9. False. Although Dell announced that it will sell two desktop PCs at Wal-Mart stores beginning in early June, it also noted that this is just the first step in a broad global retail push as the company breaks from its purely direct sales model to jump-start its sales and profits.

10. False. Even the American Idol finale couldn't divert investor attention from continued Bancroft family opposition to the company's bid for Dow Jones, as well as new antitrust trouble in the U.K. concerning British Sky Broadcasting, in which it holds a 38% ownership position. Shares of News Corp. gained 0.5% for the week, but never came close to its 52-week high of $25.78. 

Scoring
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!

Borders, Dell, and Coca-Cola are Motley Fool Inside Value picks. TiVo, Costco, and Dell are Motley Fool Stock Advisor selections. 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 NYSE Euronext. She serves as an arbitrator for the New York Stock Exchange and the NASD. The Fool has a disclosure policy.