There WILL Be a Quiz: Weekly Markets Recap

The acquisition of The Wall Street Journal made headlines last week, while credit woes continued to be the market's top story.

Following the prior week's stock-market rout, bargain hunters stepped in Monday and sparked a rally. The Dow rose more than 92 points, the S&P 500 climbed nearly 15, and the Nasdaq notched a 21-point climb. There was a change on Tuesday, when renewed subprime and credit concerns, coupled with record-high oil prices, pushed the major indexes down over 1%.

Prices rose the next two days. As oil prices retreated on Wednesday, choppy trading gave way to late-day gains. The market rose broadly, with the Dow ticking up more than 150 points. Solid earnings helped the market rise on Thursday, and resulted in a 100-point gain for the Dow and a 22-point increase in the Nasdaq.

Then came Friday. Instead of the day's banner headline trumpeting weak July employment figures, escalating troubles in the credit markets captured Wall Street's attention. The major indexes each lost more than 2%, leaving the Dow with its third-biggest one-day loss for the year and the S&P 500 below its 200-day moving average.

The main (economic) feature this week will be the Federal Open Market Committee's meeting tomorrow to discuss interest rates. The Federal Reserve is expected to leave its target rate unchanged at 5.25%, but the accompanying policy statement will be parsed for clues to future action. Other data on the calendar include productivity and consumer credit tomorrow, wholesale trade on Wednesday, and import and export prices on Friday.

Corporations posting earnings include Wynn Resorts today; Cisco, Marsh & McLennan, and Tyco tomorrow; AIG, Cablevision, and Toll Brothers on Wednesday; and Dynegy, NVIDIA, and Vonage on Thursday.

Stay market-tuned and Foolish!

Capital Markets Summary

U.S. Equities

Commodities

Foolish Quiz
1. True or false: July is usually the third quarter's worst month for stocks.

2. True or false: News Corp. (NYSE:NWS) increased its bid to seal the deal with Dow Jones (NYSE:DJ).

3. Which company announced bad news on Wednesday: Bear Stearns (NYSE:BSC) or Beazer Homes (NYSE:BZH)?

4. On Tuesday, American Home Mortgage (a) announced it may have to liquidate assets, (b) declared bankruptcy, (c) lost 90% of its market value, (d) all of the above.

5. True or false: International sales drove earnings growth at General Motors (NYSE:GM).

6. True or false: Alcatel-Lucent rang up impressive earnings.

7. True or false: Nokia mobilized solid earnings.

8. True or false: Radio Shack broadcast solid earnings.

9. Which media company posted a quarterly profit: CBS or Time Warner?

10. True or false: Wendy's may add roast beef to its menu.

Answers
1. False. Despite thoughts of a slow summer stemming from "sell in May and go away" syndrome, Stock Traders Almanac notes that July is typically the best month in the third quarter for stock-market performance. With the 3.2% drop in the S&P 500 this past July, let's hope that's not the case this year.

2. False. Late Tuesday, the Bancroft family, which owns approximately 37% of the voting shares of Dow Jones, accepted News Corp.'s $5 billion bid to purchase The Wall Street Journal, which values each share at $60. For the week, shares of Dow Jones rose 6.9% and shares of News Corp. fell 1.1%.

3. Bear Stearns. Despite initial negative headlines swirling around both companies on Wednesday, beleaguered homebuilder Beazer officially rebutted its rumored bankruptcy filing. The Bear, on the other hand, confirmed late Tuesday that it had suspended redemptions at another of its hedge funds -- the Bear Stearns Asset-Backed Securities Fund -- although it denied that the fund was in danger of shutting down. After declining 40% during the day, shares of Beazer closed down 17.9%, while those of Bear fell 2.2%.

The news only got worse for Bear on Friday. Standard & Poor's, a division of McGraw-Hill (NYSE:MHP), cut its rating outlook to negative, and the firm's CFO commented that the credit market was "as bad as I've seen it" in 22 years. That's not the kind of comment which soothes investors, and shares of Bear fell another 6.3%.

4. (a), (c). American Home Mortgage's announcement Tuesday that it may have to liquidate assets in the face of margin calls led the overall market lower. As the company teetered on bankruptcy, shares closed at $1.04 on Tuesday, a 90.1% plunge from the previous session, and a 97.1% drop from its 52-week high of $36.40. The saga concluded late Thursday when the company announced it would close all operations except its thrift and servicing units the next day.

5. True. Before the bell on Tuesday, GM posted its third consecutive quarterly profit. The automaker showcased earnings growth in Europe, Latin America, and Asia. Operations even improved in North America, despite a net loss. The following day, GM reported an 18.5% drop in July auto sales, while Ford announced a 19.1% decline, DaimlerChrysler posted a 9.1% falloff, and Toyota saw a 3.5% slip.

6. False. On Tuesday, Alcatel-Lucent rang up an unexpected second-quarter loss, blamed on merger-related costs and an unfavorable product and geographic mix. Shares of the telecom equipment maker dropped 12.5%.

7. True. Following Nokia's announcement on Thursday that its second-quarter profit more than doubled and its market share grew to 37%, shares hit a six-year high of $30.95 and closed 8.8% higher for the day.

8. False. On Monday, Radio Shack posted a higher-than-expected second-quarter profit, but a worse-than-expected 15% drop in revenue, blamed on weaker wireless sales and store closures. Shares fell 11.2%.

9. Both. Time Warner posted a 5.2% increase  in its second-quarter profit in line with expectations, although ad revenue gains slowed. The company also announced a $5 billion share repurchase plan. While CBS also revealed a second-quarter profit amid falling revenues at both its TV and radio stations, its bottom line dropped 48% from a year ago, a period which benefited from a sale of the Paramount Parks unit and a tax gain.

10. True. Well, Wendy's menu may not change, but its ownership could. On Tuesday, news broke that billionaire investor Nelson Peltz said his Triarc Companies (NYSE:TRY), the parent of roast beef sandwich king Arby's, would be willing to buy the hamburger chain for $41 per share. Although management didn't comment on the status of any negotiations -- or any future menu changes -- shares of Wendy's climbed 4%.

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!

Marsh & McLennan are Motley Fool Inside Value picks. NVIDIA and Time Warner 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, does not own shares of the companies discussed in this article. She serves as an arbitrator for the New York Stock Exchange and the NASD. The Fool has a disclosure policy.