Surprise, surprise: Credit was the name of the game last week, as the bond market drove the equity markets. Oil climbed higher, the dollar crept lower, and General Motors (NYSE:GM) cleared the way for bankruptcy. But before we dive into some analysis and this week's catalysts, here's a look at how the major indices finished the week:

  • S&P 500: Up 3.6% to 919.14
  • Dow: Up 2.7% to 8,500.33
  • Nasdaq: Up 4.9% to 1774.33

If you ignored the traditional adage, "Sell in May and go away," you would have done pretty well. For the month of May:

  • S&P 500: Up 5.3% to 919.14
  • Dow: Up 4.1% to 8,500.33
  • Nasdaq: Up 3.3% to 1774.33

May was the third consecutive month that the S&P 500 gained ground, marking the longest "winning streak" since the market peaked in October 2007, and the biggest three-month percentage gain in more than 10 years.

The bond markets get the credit
The story that moved the market for much of the week was the increase in yields on long-term Treasury bills. If rates continue to move higher, it could throw a wrench into the beginning of the economic recovery. On the other hand, rates moving higher could signal that the economy is healing, or that investors may be moving away from the safe haven of Treasuries into riskier assets like stocks. The silver lining here is that the spread between short-term and long-term interest rates is widening. That's positive for banks, whose operations are essentially based on borrowing at low rates, lending at higher rates, and profiting off the spread. Regional banks without commercial mortgage exposure could be winners here.

Crude and greenbacks
Oil and the dollar were the other big stories of last week. Oil hit a high for 2009, closing up for the week at more than $65 a barrel. The commodity's price has been steadily creeping higher as the greenback loses value, certain economic data points help traders push oil prices upward, and the "reflation" trade comes back in vogue.

With oil back on the rise, energy stocks are resuming their runs. Though we are still in a recession, and demand for energy is lower than in normal times, oil (and therefore energy) stocks will most likely be bid higher when the global economy does recover. This means it could be time to explore getting into drillers and exploration & production companies such as Transocean (NYSE:RIG). Look for market leaders at good valuations before you start digging into any new positions.

Earnings and corporate news
The Commerce Department reported Friday that U.S. companies actually posted their first quarterly increase in earnings following a record six consecutive quarters of declines. Here's a quick look at some notable companies that reported earnings last week:

  • Dell (NASDAQ:DELL) reported a 63% plunge in earnings in its first quarter, while sales slipped 23%, as business spending was weak. The company cautioned that the PC market hasn't hit bottom yet, and that demand remains weak.
  • Procter & Gamble (NYSE:PG) issued disappointing earnings guidance for the company's 2010 fiscal year, which starts July 1. As consumers trade down to cheaper, generic goods, P&G shrewdly understands the need to retain its buyers' loyalty. It's altering its longtime strategy by developing lower-priced products.
  • Tiffany & Co. (NYSE:TIF) reported a 62% decline in earnings, while sales dropped 22%, as consumers continued to avoid luxury-item purchases. The company maintained its outlook for the full year, stating that its rate of decline may be starting to level off.
  • J. Crew (NYSE:JCG) crushed first-quarter results. The retailer posted earnings of $0.34, excluding one-time items, on revenue of $345.8 million. Analysts were expecting earnings of $0.11 per share, on revenue of $322.11 million. Completing its earnings-report hat trick, the retailer issued second-quarter earnings guidance that topped Wall Street's consensus.

GM towed to the repair shop
Iconic General Motors filed for bankruptcy Monday. The American taxpayer will own a whopping 60.8% of the deceased automaker; Canadian taxpayers will own 11.7%; the United Auto Workers union will hold 17.5%; and the bondholders get the last 10%. GM will be replaced by Cisco Systems in the coveted Dow Jones Industrial Average.

Catalysts to watch for this week

Monday:

  • The ISM Manufacturing Index rose to 42.8 from 40.1 in April. Any reading under 50 signals contraction. While, we're getting closer to 50 from the lows, we're not there yet.
  • Personal income rose for April by 0.5%, compared with a 0.3% decline in March.
  • Construction spending for April rose 0.8%, compared to a 0.3% increase in March.

Tuesday:

  • Pending home sales are expected to increase 0.5%, compared with an increase of 3.2% last month.
  • May auto sales figures come out today.

Wednesday:

  • May's ISM Services Index debuts. Observers expect it to tick up to 45 from 43.7. Anything below 50 signals contraction.
  • Factory orders for April are due, with an expected increase of 0.3%, compared with March's decline of 0.9%.

Thursday:

  • After a preliminary reading of +0.8%, we should see a revised productivity number for the first quarter.

Friday:

  • May's unemployment numbers come out Friday. Observers are bracing for a loss of 550,000 jobs in May, compared with 539,000 jobs lost in April. That would bring the unemployment rate up to 9.2%, from 8.9% currently.

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Fool contributor Jennifer Schonberger does not own shares of any of the companies mentioned in this article. Dell is a Motley Fool Inside Value pick. Procter & Gamble is a Motley Fool Income Investor selection. The Fool owns shares of Procter & Gamble. The Motley Fool has a disclosure policy.