The so-called "Santa Claus rally" slid out of sight last week as investors rang in the new year with concerns over future Fed policy and corporate earnings.

Markets finally reopened on Wednesday after being closed for the longest stretch since 9/11, thanks to the New Year's holiday and President Ford's funeral. There was initial pent-up enthusiasm over the year's first trading session, a stronger-than-expected manufacturing report, and falling oil prices, but it dissipated as newly released Fed minutes revealed concerns over both inflation and a slowing economy. Although the Dow hit a new intraday high, stocks relinquished their gains and closed mixed, registering only small advances by the Dow and Nasdaq and a decline in the S&P 500.

On Thursday, amid continuing interest-rate concerns, plunging oil prices, and an uninspiring mixed bag of retail sales figures, the broad market managed to close slightly higher, while techs led Nasdaq up 30 points. Friday's stronger-than-expected December employment figures and a reduced earnings forecast from Motorola (NYSE:MOT) brought equities lower across the board. The Dow closed down more than 82 points and the Nasdaq gave back more than 19 points, bringing the first week of trading in the new year to a disappointing finish.

Economic data scheduled for release includes trade figures on Wednesday, followed by retail sales and business inventories on Friday.

Corporations releasing earnings include Alcoa and Ruby Tuesday tomorrow, Genentech on Wednesday, and Stride Rite on Thursday.

Stay market-tuned and Foolish!

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Foolish Quiz
1. The Dow's drop last Friday was the largest:
(a) in two weeks
(b) in a month
(c) in two months

2. True or false: Shareholders of Constellation Brands (NYSE:STZ) likely reached for a drink after the company reported earnings.

3. True or false: Monsanto (NYSE:MON) harvested solid earnings, which invigorated its shares.

4. True or false: Intel (NASDAQ:INTC) raised its earnings outlook last week.

5. Which company constructed a rise in its shares last week: Home Depot (NYSE:HD) or Lennar (NYSE:LEN)?

6. True or false: If you're planning on getting rid of those unwanted holiday gifts on eBay, you'd better do it soon.

7. True or false: Cisco (NASDAQ:CSCO) networked a deal with JDS Uniphase.

8. Which retailing segment posted better holiday sales figures: luxury stores or specialty apparel chains?

9. True or false: The price of Christmas 2006 was on par with general inflationary expectations.

10. True or false: "If Santa Claus should fail to call, bears will come to Broad and Wall."

1. (b). The Dow's 0.7% decline was the largest since Nov. 27, as was the S&P 500's 0.6% drop. Things could have been worse. At one point during the day, the Dow was down more than 115 points before regaining a bit of composure.

2. True. If Constellation shareholders reached for a drink after the company reported earnings on Thursday, they weren't in a celebratory spirit. The alcoholic beverage company announced 1% growth in third-quarter profits, but lowered its full-year forecast, citing increased competition from Great Britain. Shares took it on the chin, stumbling 11.4%.

3. False. Despite the company reaping a 50% growth in first-quarter earnings, Monsanto's 2007 earnings estimate fell short of expectations and failed to take root with investors. Shares fell when the seed company announced the news on Thursday, wilting 1.7%.

4. False. Although Intel did not increase its estimates, Banc of America did raise its outlook on the chip company, sending its shares up 4% on Thursday.

5. Home Depot. Shares rose 2.3% on Wednesday after Home Depot announced the resignation of chairman and CEO Bob Nardelli, but slipped 0.9% for the week. Lennar cut its fourth-quarter outlook, citing market conditions, and shares fell 5.3% for the week after declining each day.

6. True. eBay announced on Thursday that it will raise its listing fees at the end of January. Shareholders responded by lifting shares 4.7%.

7. False. The tech sector was buzzing with deals on Thursday, with both Cisco and JDSU announcing transactions -- just not with each other. Cisco said it will acquire IronPort Systems for $830 million, while JDSU agreed to acquire Casabyte for an undisclosed sum. Shares of Cisco advanced 2.6%, while those of JDSU climbed 4.2%.

8. Luxury stores. Higher-end retailers posted stylish sales figures, with same-store sales rising 11% at Saks, 9% at Nordstrom, and 7.1% at Neiman Marcus. Spending was more restrained at mid-level stores, with same-store sales at Ann Taylor dropping 5.3% and those at Gap falling 8%.

9. True. According to the MarketBeat blog in The Wall Street Journal, an investment strategist at PNC Wealth Management has constructed a Christmas Price Index meant to examine the prices over each of the past 22 years of those gifts mentioned in the carol "The 12 Days of Christmas" (for example, calling birds, golden rings, and a partridge in a pear tree). The 2006 reading reveals the index at an all-time high of $18,920, up 3.1% from last year and in line with the CPI inflationary gauge.

10. False. The "Santa Claus Rally" (or lack thereof), that presumed euphoric state of a merry stock market occurring over the last five trading days of December and the first two in January, doesn't always have bearing on the rest of the year's performance. No such rally materialized last year, either, yet stocks pulled out their best performance in three years. Take that, Santa!

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!

Intel and Home Depot are Motley Fool Inside Value picks. eBay is a Motley Fool Stock Advisor selection. Gap is a recommendation of both services. 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 mentioned in this article. She serves as an arbitrator for the New York Stock Exchange and the NASD. The Fool has a disclosure policy.