Stocks celebrated Columbus Day by proving last week that the market was not flat.

Even while North Korea tried to remake the world through its nuclear testing, the market closed slightly higher Monday. Merger activity and optimism about the upcoming earnings season revived stocks, which had languished most of the day in the red on sluggish holiday trading. Higher volume but still-uninspiring trading left the major indices closing to the upside again on Tuesday.

A disappointing launch to third-quarter earnings, and news of a private plane crash in Manhattan, brought stocks into negative territory on Wednesday. The major indices closed down moderately.

On Thursday, stocks set sail for a broad-based rally. The Dow climbed more than 95 points, to another record close, thanks to strong corporate earnings and economic data revealing moderate strength. Despite weaker-than-expected retail data, the Dow navigated to another record finish on Friday, charting its own new path and leaving many to believe that a hard landing was nothing more than a myth.

Economic reports scheduled for release include the producer price index and industrial production tomorrow, consumer price index and housing starts on Wednesday, and leading indicators and the Philadelphia Fed survey on Thursday.

Corporations scheduled to release earnings include Mattel and Wachovia today, and IBM, Intel, Johnson & Johnson, Merrill Lynch, Motorola, Office Depot, McClatchy, United Technologies, Wells Fargo, and Yahoo! tomorrow. On Wednesday, we'll hear from Abbott, Allstate, Apple, Boston Scientific, General Dynamics, Kinder Morgan, St. Jude Medical, and Washington Mutual, followed on Thursday by Bank of New York, Broadcom, Dow Jones, Eli Lilly, Fifth Third Bancorp, Google, Hershey, Honeywell, McGraw-Hill, Nasdaq, New York Times, Nokia, Quest Diagnostics, Textron, Tribune, UnitedHealth, VeriSign, Wyeth, and Xilinx. Finally, Friday will bring reports from Caterpillar, Merck, Schering-Plough, and Schlumberger.

Stay market-tuned and Foolish!

Capital Markets Summary

U.S. Equities

10/13/06 Close

Weekly Change (%)

YTD Change (%)

Dow

11,960.51

0.9

11.6

Nasdaq

2,357.29

2.5

6.9

S&P

1,365.62

1.2

9.4

Commodities

Price ($)

Weekly Change (%)

Crude oil

58.69

-1.86

Gold

593.90

2.84


Foolish Quiz
1. Friday's market push was led by:
(a) large caps
(b) small caps
(c) techs

2. True or false: The Dow surpassed the 12,000 level in intraday trading last week.

3. This company's earnings report left an unpleasant aftertaste with investors:
(a) McDonald's (NYSE:MCD)
(b) PepsiCo (NYSE:PEP)
(c) Wendy's (NYSE:WEN)
(d) Yum! Brands (NYSE:YUM)

4. True or false: The earnings report from Alcoa (NYSE:AA) put a shine on the opening of the new reporting season.

5. True or false: Shares of General Electric (NYSE:GE) lit up on higher third-quarter revenues.

6. This company's shares rose the most last week due to deal news:
(a) Cablevision
(b) Google
(c) PNC Financial

7. True or false: MasterCard shares rang up profits last week.

8. Who got a better deal last week-- Bank of America shareholders or account holders?

9. Last month's retail sales numbers showed strength in:
(a) apparel
(b) autos
(c) food
(d) home-improvement retailers

10. True or false: Like the U.S. market, Korean shares shook off North Korea's nuclear testing.

Answers
1. (b), (c). Small caps and techs led the advance on Friday, with the Russell 2000 rising 0.7% and the Nasdaq edging up 0.5%, compared to the 0.1% gain in the Dow and 0.2% increase in the S&P 500.

2. True. The Dow reached a high of 12,009.07 on Friday before dropping back to close at 11,960.51.

3. (b). The financial menu for Thursday included food and beverage news.

A 71% increase in third-quarter profits at PepsiCo couldn't put a pop into its shares, which fizzled 1.6% on Thursday following its report. Strong international performance and sales of non-carbonated beverages and snack foods helped the company, while sales volume of its namesake beverage and operating profit margins provoked jitters.

Investors found the unexpected 20% rise in third-quarter profits at Yum! Brands extra yummy, sending shares up 8.3%. While McDonald's did not report earnings, it did raise third-quarter guidance above expectations, for a fast share gain of 2.4%.

Meanwhile, shareholders of Wendy's digested the company's announcement that it will sell Baja Fresh Mexican Grill for $31 million and also plans a tender offer for as much as $800 million worth of its shares. Shareholders found these recipes appetizing, sending shares 4.1% higher.

4. False. Despite an 86% surge in third-quarter earnings, sales fell 2% from the prior quarter, and the aluminum producer disappointed analysts overall when it reported earnings after the bell on Tuesday. Shares fell 5.1% the next day.

5. False. Shares of GE suffered a 0.7% brownout on Friday after the company reported 6.1% profit growth but weak margins, particularly in television operations and plastics. GE is often promoted as the economy's bellwether stock, and the company's CEO said he considers the U.S. economy "solid".

6. (a). Cablevision shares rose 12.6% last week following a $27-per-share offer by the controlling shareholders, the Dolan family, to take the company private in a transaction valued at $7.9 billion.

Google shares climbed 1.6% last week after its announcement, following Monday's closing bell, that it would acquire online video site YouTube for $1.65 million in stock.

Pittsburgh-based bank PNC Financial fell 4.9% last week. The bank had announced on Monday that it will purchase Baltimore bank Mercantile Bankshares for $6 billion. Mercantile's shares soared 21.8%

7. False. Shares of MasterCard declined 6.7% following news that rival Visa seeks to go public by selling a majority stake in the company more than a year from now.

8. Account holders. Bank of America announced last Wednesday that retail customers with $25,000 in accounts could trade stocks as many as 30 times per month with no commission fees. That announcement cut shares 1.1%, and similarly depressed shares of other online brokerages, including Charles Schwab, E*Trade, and TD Ameritrade. Account holders may have gotten a deal, but Fools know that it's better to plan a portfolio carefully than to engage in excessive trading.

9. (a), (d). Possibly foretelling a strong holiday shopping season, folks apparently still want their clothes and homes to look good. Retail sales declined 0.4% in September, but lower gas prices left more cash in consumers' wallets. The data revealed that these extra bucks were spent on apparel and, surprisingly given the housing slowdown, home-improvement retailers. Auto sales remained unchanged, and food purchases slipped a bit.

10. False. While U.S. shares rallied last week, Korean shares stumbled. The iSharesMSCI South Korea Index Fund (AMEX:EWY) fell 1.8%. Wouldn't you lose some ground if your unstable, cognac-quaffing neighbor was shooting off rockets in your backyard?

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!

MasterCard, Intel, and UnitedHealth are Motley Fool Inside Value picks. Bank of America, Eli Lilly, and Johnson & Johnson are Motley Fool Income Investor recommendations, while Merck was a former recommendation of that service. Yahoo!, UnitedHealth, and Charles Schwab are Motley Fool Stock Advisor selections. Whatever your investing style, the Fool has a newsletter for you .

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.