Early indications of holiday sales last week showed strength, but investors seemed confused about whether to continue shopping on Wall Street.

The week began with a significant sell-off on Monday, blamed on various issues. The culprits included weak sales by Wal-Mart (NYSE:WMT), a declining dollar, and oil climbing back over the $60-per-barrel level. The Dow dropped 1.3%, the S&P pulled back 1.4%, and the Nasdaq fell 2.2%.

The decline halted on Tuesday amid mixed economic data and comments from Fed Chief Bernanke suggesting that inflation remains a risk despite a slowing economy. Each of the three major indices registered small gains. Stocks continued to climb on Wednesday despite a decline in new home sales. Investors instead chose to take their wallets out and focus on an upward revision to third-quarter gross domestic product numbers, sending the indices up again, with the Dow advancing more than 90 points.

Stocks closed little changed on Thursday after a volatile session which began with an early drop because of a weak reading on Midwestern manufacturing activity. On Friday, stocks staged a comeback in the late afternoon after dropping sharply earlier on account of more weak reports on manufacturing and construction. After declining 125 points, the Dow regained almost 100 points as investors eyed bargains in the market.

The most-awaited economic report this week is the November employment figures on Friday. Other data scheduled for release include the National Realtors' Association pending home index for October due today; revised third-quarter productivity figures, October factory orders, and the November ISM-Non-Manufacturing survey tomorrow; and the preliminary consumer sentiment reading for November on Friday.

Corporations reporting earnings include Kroger today; Novell, Toll Brothers, and World Wrestling Entertainment tomorrow; and Jos. A. Bank, National Semiconductor, and Verifone on Thursday.

Stay market-tuned and Foolish!

Capital Markets Summary

U.S. Equities

12/1/06 Close

Weekly
Change (%)

YTD
Change (%)

Dow

12,194.13

(0.7)

13.8

Nasdaq

2,413.21

(1.9)

9.4

S&P

1,396.71

(0.3)

11.9


Commodities

Price ($)

Weekly
Change (%)

Crude oil

63.66

7.46

Gold

651.00

2.46


Foolish Quiz
1. This index gained the most in November:

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

2. True or false: The market's losses on Friday are typical of December.

3. Choose your style: Did a casual clothing retailer or an upscale jewelry retailer reveal more attractive earnings?

4. Choose your grocery item: Did a ketchup maker or a pork producer turn in the least appetizing earnings?

5. Last week, Ford (NYSE:F) announced each of the following:

(a) plans to issue more debt
(b) plans to increase its share repurchase program
(c) a significant drop in November sales
(d) a sale of stock by Kirk Kerkorian

6. True or false: All the news that's fit to print included a bid for New York Times by former AIG Chairman Maurice Greenberg.

7. Which sector fared best last week:

(a) energy
(b) precious metals
(c) retail
(d) transportation

8. True or false: November marked the largest dollar amount of IPOs in over a year.

9. Which shopping day produced record results: Black Friday or Cyber Monday?

10. True or false: The corporate parent of the Macy's Thanksgiving Parade marched to the beat of impressive same-store sales.

Answers
1. (b). The Nasdaq rose 2.75%, beating out the Dow's 1.12% advance and the S&P 500's 1.65% climb.

2. False. Although stocks turned in their worst performance in five years on Friday, The Stock Trader's Almanac states that the S&P 500 has enjoyed an average gain of 1.7% in December since 1950, making it the best month for that broad market indicator.

3. The casual clothing retailer. While both Aeropostale (NYSE:ARO) and Tiffany (NYSE:TIF) reported strong earnings on Tuesday, earnings of the teen apparel purveyor flew just a bit higher than those of the jeweler. Shares of Aeropostale jumped 6.8% after the company reported a 25% rise in third-quarter profit. Shares of Tiffany still shone brightly, though, as they rose 6.4% after the company announced a 23% increase in third-quarter profit.

4. The pork producer. Both companies announced earnings on Thursday. SmithfieldFoods (NYSE:SFD) reported a 13% decline in second-quarter earnings, blaming weak demand for fresh pork. Perhaps some ketchup would help the lousy taste left in investors' mouths, as they sent shares down 2%. Shares of Heinz (NYSE:HNZ) rose 1.1% despite a 6% drop in second-quarter earnings as it raised its full-year earnings forecast.

5. (a), (c). Ford began the week by announcing the issuance of up to $18 billion in financing, including the use of asset-backed securities for the first time. The automaker ended the week by reporting a 9.6% drop in November sales. For the week, Ford shares skidded 5.6%. The reported news of Mr. Kerkorian's stock sale involved the billionaire investor's divestiture of his remaining 28 million shares of General Motors.

6. False. Although various media outlets reported throughout the week on an attempted bid by Mr. Greenberg to gain control of the company, he denied such rumors. For its part, the Grey Lady stayed out of the fray, while her shares slipped a penny for the week.

7. (a). Commodities showed their strength last week, with the Amex oil index rising 4.6%, and the Philadelphia gold and silver index gaining 4.3%. The S&P Retail Index slipped 1.2%, and the Dow Jones Transportation Index stalled, losing 2.9%.

8. True. The IPO market introduced $6.5 billion in new offerings last month, the biggest month since February 2005. Spirit Aerosystems led the way with the second-largest offering of the year, and the company's shares are up 12.1% from their offer price.

9. Cyber Monday. E-tailers enjoyed a 26% jump in sales over last year, hitting a record $608 million, the highest single-day level yet. According to the Nielsen/NetRatings' Holiday eShopping Index, eBay attracted 10.9 million visitors, while Amazon followed with 6.9 million. Black Friday turned in some cheery news as well, delivering a 6% increase in sales from the prior year.

10. True. The miracle on 34th Street transformed into the wonder of Wall Street. On Thursday, shares of Federated Department Stores gained 3% after the company reported an 8.5% increase in same-store sales, far above the expected 4.8% figure.

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!

Wal-Mart is a Motley Fool Inside Value pick. eBay and Amazon are Motley Fool Stock Advisor selections. New York Times and Heinz are Motley Fool Income Investor picks. 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.