There WILL Be a Quiz: Weekly Markets Recap

Chances are your Mom received a better Mother's Day present from you than she did from her stock investments last week.

At the beginning of the week, only the Dow finished higher both of the first two trading days, actually closing within 100 points of its all-time high on Tuesday. Even after the Fed's expected announcement Wednesday afternoon that it raised rates for the 16th consecutive time to 5%, stock action was rather muted. Indexes closed little changed from before the announcement, as the closely scrutinized accompanying policy statement indicated only ambiguity about future action. Matters changed for the worse Thursday when rising oil prices fueled investors' inflationary fears and led many to believe that future rate increases would continue. Major indexes returned any of the week's earlier gifts and fell dramatically. The sell-off continued Friday, leaving the Dow, the Nasdaq, and the S&P 500 in negative territory for the week.

Maybe equities can make it up to Mom this week. Economic data will again come under close examination, with significant releases including April figures for the producer price index Tuesday and the consumer price index on Wednesday. Companies reporting earnings include Target Monday, Hewlett-Packard, Home Depot, and Wal-Mart Tuesday, and Dell on Thursday.

Stay market-tuned and Foolish!

Capital Markets Summary:

Foolish Quiz:

1. This Dow component has led the average higher since the index's record high in 2000:

__ (a). Altria

__ (b). Boeing

__ (c). Coca-Cola

__ (d) Pfizer

2. The Nasdaq has outperformed the Russell 2000 so far this year.

__ True __False

3. Potential deals surfacing last Monday included:

__ (a). Emmis Communications

__ (b). Thermo Electron

__ (c). ValueClick

__ (d). Wachovia

4. Last week's earnings winners included:

__ (a). American International Group (NYSE:AIG)

__ (b). Baidu.com (NASDAQ:BIDU)

__ (c). Chipotle Mexican Grill (NYSE:CMG)

__ (d). Walt Disney (NYSE:DIS)

5. Last week's earnings disappointments included:

__ (a). Cisco

__ (b). Dell (NASDAQ:DELL)

__ (c). Expedia (NASDAQ:EXPE)

__ (d). UnitedHealth (NYSE:UNH)

6. The Beatles have found that they can't work things out with Apple.

__ True __ False

7. For many Fed watchers, the key word in the policy statement was:

___ (a). 5%

___ (b). raise

___ (c). target

___ (d). yet

8. Choose the gift most likely to keep Mom smiling over time:

__ (a) Coach handbag __(b) 10 shares of Coach

9. The following happened at BerkshireHathaway's recent shareholders meeting:

__ (a). Warren Buffett expressed wariness about metals and real estate speculation

__ (b). Buffett spoke about future potential acquisitions in Japan

__ (c). a Desperate Housewife made a pass at Buffett

__ (d). all of the above

10. If you want to compensate Mom for her annual domestic services, you might have to shell out more than $100,000.

__ True __ False

Answers:
1. (a). Altria has climbed more than 300% since January 2000.

2. False. The Russell 2000, which tracks small stocks, is up 10.3% this year compared with the Nasdaq's 1.7% gain.

3. (a), (b), (d). The chairman and CEO of Emmis must have found some spare change when he offered to buy the media company for $1.4 billion. Shares rocketed 21.1% that day. Thermo Electron fell 2.3% after it and Fisher Scientific International agreed to a $10.6 billion stock deal to create a large scientific and lab equipment provider to be called Thermo Fisher Scientific. Shares of Fisher Scientific gained 3%. Fisher shareholders will receive two shares of Thermo Electron, representing a 7% premium, based on the previous day's close. Wachovia slid 6.7% after it announced its agreement to purchase Golden West Financial for $25.5 billion in a stock and cash deal expected to close in the fourth quarter. Golden West shares rose 6.2%. No marriage looms for online advertising agencies ValueClick and aQuantive. Their shares went in different directions amid reports of failed merger talks, sending ValueClick up 2.9% and aQuantive down 4.1%.

4. (b), (c), (d). American Depositary Shares of Chinese Internet search engine Baidu.com rose 37% Wednesday after the company posted strong first-quarter earnings and raised its second-quarter forecast. Following a sizzling first-quarter earnings release, in which Chipotle Mexican Grill reported that earnings more than tripled and sales rose 20%, its shares rose 13.1% Tuesday. After Walt Disney announced that its second-quarter net income rose 12% because strength in its ABC television programming offset weakness in its movies, its shares gained 1.8%. Leading the Dow down on Thursday, AIG dropped 5.15% after reporting that its first-quarter profit fell 16%.

5. (a), (b), (c). Tech stocks certainly took a hit last week. Cisco fell 4.3% Wednesday after it reported a slight decrease in its third-quarter profit. More worrisome to Wall Street was the company's lukewarm outlook for the next quarter. Dell fell 4.7% Tuesday once it warned that it will miss its first-quarter profit target. Expedia fell 26% Friday after reporting a sharp drop in first-quarter profits and missed analyst expectations. A problem other than earnings arose for UnitedHealth. The health-care provider said it's subject to an informal SEC inquiry reviewing how it granted stock options back to 1994.

6. True. And they don't want to hold hands, either. A British judge ruled Monday that Apple may use its apple logo on its iTunes music store. Apple Corps, the corporate guardian of the Fab Four's commercial interests, had contended that such usage violated a 1991 agreement between them in which they promised not to enter each other's business. Apple Corps has vowed to take the case to Britain's Court of Appeal.

7. (d). Most everyone expected the Fed to increase its overnight lending rate target to 5%. What sleuths were looking for was clues as to what may come next. Many believe they found their clue in the word yet, which appeared in the sentence "The committee judges that some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information." According to some, including that word signaled that the Fed does not believe a rate hike will be needed at the June meeting. However, data may prove otherwise, and there may be future hikes even if there's a pause.

8. (b). Well, we don't know for sure how things will work out in the future either financially or domestically, but don't you think it's only a matter of time before Fido chews up one of the handles of the $328 Coach signature shoulder tote? Meanwhile, you could purchase 10 shares of the company's common stock for about the same price. Given that Coach announced board approval of an up to $500 million share buyback program for its common stock by the end of June 2007, that might prove the wiser choice. Share repurchase plans often help boost share price.

9. (d). At the meeting, on May 6, Buffett answered questions about the purchase of an 80% position in Israeli metal cutting tools firm Iscar for $4 billion, announced the previous day. He said he would be willing to examine potential acquisitions worldwide given the right circumstances. And, yes, the cast of Desperate Housewives appeared in the company's annual film compilation of various features and commercials. During the cast's skit, Nicollette Sheridan opines about the Oracle's prowess in places other than the financial markets. Supposedly rejected, she found companionship instead with Vice Chairman Charlie Munger.

10. True. By taking into account services equivalent to a housekeeper, a cook, a day-care provider, a janitor, and a CEO, Salary.com estimates that a stay-at-home mom would earn about $134,000 for her household contributions. And that doesn't include any tips in the form of loose pocket change found while doing the laundry!

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!

What type of investor are you? Coca-Cola, Home Depot, and Pfizer are Inside Value recommendations and UnitedHealth is a Stock Advisor recommendation. Dell is a selection of both Inside Value and Stock Advisor. You can chat about Tom and David Gardner's top picks or stocks selling for bargain prices with other investors on the discussion boards with a free trial.

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.