While America celebrated its independence, more companies continued to lose theirs as the takeover parade marched on.

The third quarter began with a two-day winning streak. The holiday week opened Monday with stocks strutting higher to the tune of merger activity and strong manufacturing figures. Thin holiday trading in a shortened session Tuesday brought another round of buying amid more deal news.

After the market reopened Thursday after the July 4 holiday, stocks ended narrowly mixed as higher bond yields and more corporate takeovers competed for attention. On Friday, stocks closed higher in light and choppy trading. The June employment report revealed solid growth in the labor market, in line with expectations, but a hike in hourly wages raised concerns over inflation and heightened expectations that the Fed will remain on hold.

Traders returning to work this week will find a light economic calendar, which includes international trade and chain store sales Thursday and business inventories Friday.

The second-quarter earnings season kicks off with Alcoa reporting today, followed by Genentech, Ruby Tuesday, and Yum! Brands on Wednesday, Marriott on Thursday, and General Electric on Friday.

Stay market-tuned and Foolish!

Capital Markets Summary

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7/6/07 Close

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Foolish Quiz
1. True or false: The S&P 500 posted its best weekly return in several months.

2. Which suitor of CBOT (NYSE:BOT) upped its offer on Friday: Chicago Mercantile Exchange (NYSE:CME) or Intercontinental Exchange (NYSE:ICE)?

3. True or false: The takeover of BCE (NYSE:BCE) is the largest leveraged buyout (LBO) yet.

4. True or false: Both Blackstone (NYSE:BX) and Hilton (NYSE:HLT) shares rallied on news of their deal.

5. True or false: A new buyer is eyeing Bausch & Lomb.

6. True or false: Virgin Media agreed to go private.

7. True or false: Manor Care shareholders celebrated the company's takeover plan.

8. True or false: General Motors revved up following the June auto sales report.

9. Which private equity firm announced plans for an IPO: Apollo Management or KKR?

10. True or false: Discover gained in its first week as a newly independent company.

1. True. Despite light holiday trading, the S&P 500's 1.8% advance enabled it to claim its largest weekly return since April.

2. CME. On Friday, the Chicago Merc increased its offer for CBOT by 7%, and won the support of a major shareholder just prior to CBOT's vote scheduled for today. The deal is expected to be approved, barring any last-minute boost in competitor ICE's bid. Shareholders of each exchange were winners, with CBOT shares rising 8.7%, CME shares increasing 3.4%, and ICE shares warming up 2.8%. Stay tuned.

3. True. The agreement announced Monday by Canadian telecom BCE to be purchased by a private equity group in a $32.6 billion deal makes it the largest LBO ... yet. Shares of BCE gained 4.4% on the news.

4. True. Shares of Blackstone rose 3.1% and Hilton shares partied 25.9% higher on Thursday in celebration of the investment group's agreement to acquire the hotel chain for $20 billion in cash and assumption of $6 billion in debt. The deal values Hilton shares at $47.50, a 40% premium to Monday's closing price.

5. True. On Thursday, Advanced Medical Optics submitted a $4.3 billion takeover of Bausch & Lomb, which could upset the $3.7 billion offer of private equity firm Warburg Pincus. Shares of Bausch & Lomb gained 3.7% for the week.

6. False. So far, a deal to take Virgin Media private is only rumored, but that didn't stop shares from soaring 17.6% on Monday during the height of such chatter.

7. False. Shares of Manor Care declined 1.9% on Monday, reflecting disappointment with the company's agreement to be acquired by Carlyle Group. The $4.9 billion deal values the shares at just a 2.6% premium to the prior trading session's closing price.

8. False. GM skidded 3.5% for the week following June auto sales figures that revealed the company's sales fell 21.3% compared with the prior year, and a subsequent downgrade by Bear Stearns. Ford and Chrysler sales also declined, while the Japanese automakers continued to drive away with gains.

9. KKR. While the private equity folks were taking more public companies off the market last week, they were trying to fill the void by going public themselves. KKR filed to go public, and Apollo Management was reportedly in talks to sell a minority stake to a governmental unit of Abu Dhabi prior to commencing its own stock listing.

10. False. On Monday, Discover Financial Services began its new life independent of Morgan Stanley and started trading on the Big Board under the symbol DFS. For the week, Discover lost 10.2%.

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!

Fool contributor S.J. Caplan is a former vice president and assistant general counsel of Goldman Sachs and a 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.