There WILL Be a Quiz: Weekly Markets Recap

Following last Monday's somber fifth anniversary of 9/11, stocks triumphantly charged higher for most of last week.

A sell-off in commodities on Monday stoked confusion on Wall Street. As investors wondered whether falling energy and metals prices boded well for consumer spending or indicated a more pronounced economic slowdown, stocks ended the day little changed.

Strong earnings and lower oil prices sent stocks rallying on Tuesday. Each of the major indices rose, with retailers, chips, and housing leading the way up. The Dow charged up by more than 101 points, and the Nasdaq gained more than 42 points. On Wednesday, stocks garnered their fourth straight session advance, despite a gain in oil and a lack of other major economic releases.

Ahead of the following day's awaited inflationary reading, stocks finished mixed on Thursday. Despite another decline in oil prices, the Dow and S&P 500 slipped slightly, while the Nasdaq inched up just a little more than a point.

Friday's release of the Consumer Price Index data for August relieved anxiety over inflationary pressures, thanks to the 0.2% increase being in line with expectations. Stocks rallied in heavy volume to levels unseen for months.

Although the market now seems convinced that the Fed will not raise rates again when it meets this week, the most eagerly anticipated event in the economic calendar for the week ahead remains the announcement on Wednesday afternoon from the Federal Open Market Committee, the branch of the Fed responsible for setting interest rates. Other reports scheduled for release include the homebuilders' index today, housing starts and the Producer Price Index tomorrow, and leading indicators on Thursday.

Corporations reporting earnings this week include AutoZone and Oracle tomorrow; Biomet, CarMax, Circuit City, Darden Restaurants, and Morgan Stanley on Wednesday; and 3Com, ConAgra, FedEx, Nike, and Rite Aid on Thursday.

Stay market-tuned and Foolish!

Capital Markets Summary

U.S. Equities

Commodities

Foolish quiz
1. These indices recorded their biggest weekly gains in about a month:
(a) the Dow
(b) the Nasdaq
(c) the S&P 500

2. True or false: The Nasdaq recorded its longest winning streak since January.

3. This investment bank reported the strongest profits:
(a) Bear Stearns (NYSE:BSC)
(b) Goldman Sachs (NYSE:GS)
(c) Lehman Brothers (NYSE:LEH)
(d) none of the above

4. Which automaker on Friday lowered its operating forecast for this year -- DaimlerChrysler (NYSE:DCX) or Ford (NYSE:F)?

5. This company's stock jumped early last week on rumors of a buyout:
(a) Dynegy
(b) Freescale Semiconductor
(c) Health Care REIT
(d) NS Group

6. True or false: Retail sales rose in August.

7. The shares of which company that announced a change in top management gained the most for the week -- Bristol-Myers Squibb or Hewlett-Packard?

8. True or false: Google believes money may be made by giving it away.

9. Which McDonald's menu item boosted same-store sales last month -- French fries or snack wraps?

10. Which index has risen the most in the five years since 9/11?
(a) the Dow
(b) the Nasdaq
(c) the S&P 500

Answers
1. (b), (c). While each of the indices enjoyed good weeks, the Nasdaq and S&P 500 claimed their largest advances since the week of Aug. 14.

2. True. Six straight days of advances put the index on track for its best run in eight months.

3. (a). The Bear climbed strongly past its competitors in third-quarter profits when it reported on Thursday a 16% gain, largely attributable to strong sales and trading performance. Shares gained 2.3%. Goldman led off last week's investment-bank reporting on Tuesday by revealing basically flat but still better-than-expected profits; its shares gained 4.8%. Lehman reported a 4% gain on Wednesday, leading to a 3% advance in its shares. For the week, the AMEX Securities Broker/Dealer Index rose 7.4%.

4. DaimlerChrysler. Both automakers did make news on Friday. DaimlerChrysler lowered its full-year profit forecast because of greater-than-expected losses at Chrysler, and Ford announced more layoffs and plant closings and said it is suspending its dividend. Shares of both companies took a hit, with DaimlerChrysler losing 6.7% and Ford reversing by 11.8%.

5. (b). Rumors circulated on Monday that chipmaker Freescale Semiconductor may be bought out on a $16 billion leverage buyout by a consortium of firms. Shares surged 20% that day and 20.8% for the week after the company announced on Friday its agreement to be purchased for $17.6 billion in a buyout led by the Blackstone Group.

In other news, the metals sector fused together a $1.46 billion transaction in which steelmaker Ipsco announced on Monday that it agreed to purchase steel-tube producer NS Group. Shares of Ipsco fell 6.4%, while those of NS enjoyed a 40% jump, thanks to the deal valuing the company's shares at a 43% premium to the previous day's closing price.

Health Care REIT announced on Wednesday that it agreed to buy Windrose Medical Properties Trust for $877 million in an exchange offer including the assumption of $426 million in debt. Shares of Health Care slipped 3.4%, while those of Windrose climbed by 12.5%.

And finally, power-generating company Dynegy made public on Friday that it will purchase the power plants of private-equity fund LS Power Group for more than $2 billion, in a transaction that will result with the LS holding a 40% stake in Dynegy. Shares powered up by 5.4%.

6. True. The consumer is still alive and spending, although not so much at the gasoline pump or at furniture showrooms. Retail sales increased by 0.2% last month, after July's 1.4% jump. This data has led to predictions of further possible rate hikes in anticipation of higher spending in the months to come, now that fuel prices have declined.

7. Bristol-Myers Squibb. On Tuesday, the board of Bristol-Myers announced that CEO Peter Dolan will not remain with the company. While shares have slipped 60% during his five-year tenure at the drugmaker, they rallied 4% on the news of his departure.

Over in another executive office suite on the same day, Hewlett-Packard announced that Chairwoman Patricia Dunn will step down from her role in January, although she will remain on the board. The company, embroiled in a mess concerning investigative tactics used to detect boardroom leaks, said CEO Mark Hurd will take over her duties. Shares climbed by 1.5%, a day before the California attorney general announced that he has enough evidence to bring indictments related to the incidents.

For the week, shares of Bristol-Myers rose 7.5%, while those of HP slipped a penny.

8. True. Google has formed an organization funded with approximately $1 billion to fight poverty, disease, and global warming. Unlike most traditional charities, this philanthropy will be for-profit, a distinction that will allow it to enter a full range of corporate activities, including paying taxes. Any profits will remain within the charity and not be given back to the parent corporation. Meanwhile, the market felt charitable toward Google last week in sending its shares above the $400 level once again.

9. Snack wraps. This new menu item helped last month's same-store sales at McDonald's rise 6% and the company's stock reach new six-year highs. But the restaurant chain's French fries really may win a different game. Hasbro, the maker of Monopoly, unveiled an updated edition featuring the fries, a Toyota Prius, a cup of Starbucks coffee, a Motorola Razr cell phone, and a New Balance running shoe as branded player pieces. Other new unbranded pieces include a jet, a laptop, and a Labradoodle -- but no McMansion.

10. (b). The Nasdaq has risen 27.75%, while the Dow and S&P 500 have gained 18.6% and 18.89%, respectively.

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!

Hasbro, FedEx, and Starbucks are all Motley Fool Stock Advisor selections. AutoZone and CarMax are Motley Fool Inside Value recommendations. 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, owns shares of Goldman Sachs and Google. She serves as an arbitrator for the New York Stock Exchange and the NASD. The Fool has a disclosure policy.