Last week's stock market action showered green over most participants. Economic reports indicating a growing economy without overriding inflationary concerns made many people dismiss any prior anticipation of continuing interest-rate hikes. Several other factors, including drops in oil prices and bond yields, as well as strong corporate earnings on Wall Street, sent most investors home on Friday feeling like dancing a jig.
Monday's speech by Federal Reserve Chief Ben Bernanke will be closely watched for hints about interest rates. Market participants will also likely focus on February's produce price index report, to be released Tuesday, and reports on sales of existing and new homes, to be announced on Thursday and Friday, respectively. Corporate earnings are expected from a spate of tech companies: Oracle on Monday, followed by Adobe Systems and Jabil Circuit on Wednesday. Other corporations scheduled to report include Nike on Tuesday, Morgan Stanley on Wednesday, and General Mills on Thursday. If investors like what they hear, maybe they really will find their pot of gold.
Stay market-tuned and Foolish!
Capital markets summary
U.S. Equities
| 3/17/06 Close | Weekly Change | YTD Change | |
|---|---|---|---|
| Dow | 11,279.65 | 1.8% | 5.2% |
| Nasdaq | 2,306.48 | 2% | 4.6% |
| S&P | 1,307.25 | 2% | 4.7% |
Commodities
| Price | Weekly Change | |
|---|---|---|
| Crude Oil | $62.80 | 4.74% |
| Gold | $554.50 | 2.21% |
Foolish quiz
1. The following major stock indices reached a multi-year high last week:
__ (a). the Dow
__ (b). the Nasdaq
__ (c). the S&P 500
__ (d). the Russell 2000
2. Despite an increase in bond yields, last week's equities action represented the most positive week in two months.
__ True __ False
3. Last week's stock market winners included:
__ (a). Goldman Sachs
__ (b). Boeing
__ (c). Maytag
__ (d). Sears Holdings
4. Sectors showing strength last week included:
___ (a). software
___ (b). industrials
___ (c). consumer goods
___ (d). housing
5. Merger Monday last week included news of the following tie-ups:
__ (a). Capital One Financial/North Fork
__ (b). NYSE Group (NYSE:NYX)/London Stock Exchange
__ (c). Watson Pharmaceuticals/Andrx
__ (d). McClatchy/Knight Ridder
6. If a leprechaun had granted your wish last week, it would have been for shares of General Motors.
__ True __ False
7. Economic data released last week revealed:
__ (a). higher energy prices and rising housing starts.
__ (b). lower energy prices and rising housing starts.
__ (c). higher energy prices and declining housing starts.
__ (d). lower energy prices and declining housing starts.
8. St. Patrick's Day festivities included witches on Wall Street.
__ True __ False
9. Legal brawls in the news last week included spats between New York Attorney General Eliot Spitzer and:
__ (a). H&R Block (NYSE:HRB)
__ (b). Google (NASDAQ:GOOG)
__ (c). Procter & Gamble (NYSE:PG)
__ (d). Pfizer (NYSE:PFE)
10. The All Ireland exchange-traded fund closed higher on St. Paddy's Day.
__ True __ False
Answers
1. (a), (c), (d). Last Friday's closing prices for both the Dow and the S&P represented their highest levels since May 2001. The Russell 2000, made up of small caps and established in September 1987, closed Friday at 746.09, its highest level ever recorded. The Nasdaq, however, still needs to trek higher for it to reach this year's peak of 2331.36, which it reached on Jan. 11.
2. False. With the yield on the 10-year Treasury note dropping to 4.67%, its lowest level since last December, the largest drop in bond yields this year significantly contributed to the stock market's rally.
3. (a), (b), (d). Goldman Sachs jumped 6.2% for the week, following its announcement of a record first-quarter profit with growth of 52%, including stock compensation expense. Following in its shadow, rivals Lehman Brothers Holdings and Bear Stearns also posted solid first-quarter earnings but were up only marginally for the week, with the Bear also getting slapped with a $250 million fine from the Securities and Exchange Commission for alleged illegal market timing practices. Boeing soared to the lofty altitude of $78.08 before landing at $77.85 on Friday, gaining 4.1% for the week. The aircraft company benefited from reports that it may double 787 production. On terra firma, almost one year after its formation following Kmart's purchase of Sears, Sears Holdings gained 15.8% for the week. This increase stemmed from a doubling of fourth-quarter profits despite a steep sales decline. Finally, we can only surmise that the Maytag repairman must have indeed felt a bit lonely last Friday. That's when the company's shares fell 6.9%, constituting the S&P's largest individual drop, amid reports that the U.S. Justice Department may oppose the appliance maker's proposed purchase of Whirlpool on anticompetitive grounds.
4. (b), (d). Industrial companies fared well last week, aided by Boeing's gain and Friday's report that industrial production ramped up a healthy 0.7% last month. The housing sector also felt warm and cozy, with the Philadelphia housing sector index jumping 7.4%, benefiting from an apparent end to interest rate increases.
5. (a), (c), (d). Monday's merger news translated into gains for the target companies in reported deals including Capital One's agreement to purchase North Fork for a $14.6 billion combined cash/stock offer, McClatchy's $6.5 billion offer to purchase Knight Ridder, and Watson Pharmaceutical's $1.9 billion agreement to purchase generic drug maker Andrx. Despite speculation, there has been no announced bid by the NYSE for the London Stock Exchange since the preceding week's failed bid by Nasdaq (NASDAQ:NDAQ).
6. False. Only an evil leprechaun would have done such a thing. General Motors' stock skidded 4.9% on Friday when the company widened its 2005 reported loss by $2 billion and also announced that, because of recently discovered accounting errors, it intends to restate earnings from 2000 through the first quarter of 2005. Oops.
7. (d). February's consumer price index report released Thursday showed energy prices falling 1.2% following January's 5% rise. Overall, the index rose 0.1%, as opposed to the prior month's 0.7% increase. According to the Commerce Department's separate report the same day, housing starts declined 7.9% on account of cold weather and slower demand.
8. True. Last Friday saw "quadruple witching," which signifies the quarterly expiration of stock and index futures, options, and single stock futures. Volume typically is higher on such days, which occur on the third Fridays of March, June, September, and December.
9. (a). Spitzer filed suit last Wednesday against H&R Block, alleging fraudulently marketed retirement savings plans and threatened "vast" fines for the company's refusal to admit wrongdoing. The company's stock lost 6% for the week. Spitzer is not involved in last Friday's federal court ruling that Google turn over Web addresses to the U.S. Department of Justice in connection with Justice's investigation of child pornography. Finally, Procter & Gamble and Pfizer gurgled back and forth as they engage in their own spitting contest in a recently filed federal suit concerning the companies badmouthing their rival mouthwashes.
10. False. Did you note that we didn't include a ticker symbol? It appears that despite the burgeoning array of exchange-traded funds, no ETF exists yet in the U.S. market that tracks only Irish stock performance. While doing research on this question, I found it interesting to see that Bank of Ireland (NYSE:IRE) opened up 1.1% last Friday and closed 2.5% higher for the day and 5.3% higher for the week. Some Irish eyes really must be smiling.
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!
Pfizer is a Motley Fool Inside Value recommendation. For more coverage of the market's best value stocks, try out Inside Value free for 30 days.
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 Goldman Sachs, New York Stock Exchange Group, Google, and Procter & Gamble. She serves as an arbitrator for the New York Stock Exchange and the National Association of Securities Dealers. The Fool has a disclosure policy.
