Weekly Wrap - US

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The major indices posted sharp gains this week, bolstered by strong earnings reports. The S&P 500 rallied +2.7% in a broad-based advance. Realization that the U.S. economy is improving, the understanding that the Fed isn't going to withdraw its policy support anytime soon and the ability to shake off concerns about Egypt helped bolster stocks.

All 10 of the sectors gained, with eight advancing more than 2%.

Energy (+4.2%) and materials (+4.6%) outperformed thanks to better-than-expected results from Exxon Mobil (XOM, +5.4%) and Dow Chemical (DOW +5.6%).

Defensive sectors underperformed on a relative basis, with consumer staples gaining 0.9% and utilities climbing 0.2%.

A bevy of S&P 500 companies reported earnings this week. Of the 104 S&P 500 components that reported results, 70% topped EPS estimates and 68% topped revenue expectations.

Heavyweight Exxon Mobil reported a solid EPS beat as revenue rose 17.1% y/y. Exxon's advance of +5.4% led fellow energy stocks higher.

Among other Dow components, Pfizer (PFE +6.3%) acted as a positive influence on the market after the pharma giant posted slightly-better-than-expected earnings. Merck (MRK -0.5%) also topped earnings expectations, but traders sold the stock after the company issued fiscal year 2011 EPS guidance that was about 5% below the consensus estimate.

On the downside, CVS Caremark (CVS) sank 6.4% after issuing FY2011 EPS guidance that was about 4% below expectations. In addition, the company withdrew its previous long-term target of high single-digit non-GAAP EPS compound annual growth between 2009 and 2013.

Among big movers, Electronic Arts (ERTS +21.5%) surged 22% after the video game maker posted a bottom line beat and announced a share repurchase plan. JDS Uniphase (JDS +34.5%) was the top percent gainer in the wake of its strong earnings report.

Meanwhile, retailers posted better-than-expected monthly same-store sales results for January. In total, 17 of the 25 companies Briefing.com covers exceeded expectations last month.

In economic news, nonfarm payrolls increased by 36,000 while private sector payrolls increased by 50,000. Both figures were well below the Briefing.com consensus estimates of 148,000 and 163,000, respectively.

Weather issues created a lot of variability in consensus forecasts and a lot of noise around the actual report. On a related note, the BLS indicated the weather kept 886,000 American workers from getting to work in the payroll week.

The headlines for payrolls aren't good, but the market has been slow to take them at face value as a true, and deep, disappointment.

The January report was also clouded by updated population estimates. That explained why the unemployment rate dipped from 9.4% to 9.0% while the labor force participation rate remain unchanged at 64.2%.

As equities rallied, Treasuries on the long end of the curve got hammered. The 10-year interest rate spiked from 3.32% to 3.64%, the highest level since spring 2010.

Commodities gained about 1% as the dollar fell 0.1%.

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The major indices posted another gain this week, aided by favorable momentum and positive economic data. The positive items helped offset a downside surprise and plunge in shares of tech bellwether Cisco (CSCO, -15.2% ) and an increase in lending rates out of China. Meanwhile, Egypt continued to be the focus of the media, though the impact on the stock market was relatively limited. At the end of the week, prior to the market close, President Mubarak stepped down.

The S&P 500 is now up 5.7% this year.

Nine of the 10 sectors gained. Gains were led by consumer discretionary (+3.5%), financials (+2.9%) and industrials (+2.8%). Energy (-0.2%) and materials (+0.6%), which outperformed last week, underperformed on a relative basis. Overall trading volume was relatively light.

Cisco acted as the main drag on the S&P 500, plunging 15% after announcing a disappointing outlook. The tech giant hit a fresh 52-week low as margin compressions resulted in downside guidance for fiscal year 2011.

Retailers had a strong showing, which helped lift the consumer discretionary sector. Big Lots (BIG +22.4%) rallied on news the discount retailer was considering a possible sale. JCPenney (+14.9%) rallied as activist investor Bill Ackman said that the fair value of JCP is "meaningfully higher". Ackman's hedge fund Pershing Square owns a 15% stake in JCP.

Meanwhile, Walt Disney (DIS +6.6%) gained 6.6% after reporting upside results, sending the stock to a record high.

In other major corporate news, Coca-Cola (KO +1.6%) met estimates on strong volume growth. 3M (MMM +4.0%) increased its quarterly dividend 5% and also announced an additional $7 bln share repurchase plan.

Among financials, NYSE Euronext (NYX +17.3%) posted the largest advance. The exchange may be purchased by Deutsche Boerse, which would create the world's largest exchange. On a similar note, the latest exchange deal-making includes plans of the London Stock Exchange to acquire TMX Group, which is the owner of the Toronto Stock Exchange, for $3.2 billion.

In other M&A news, Danaher (DHR +7.6%) is buying Beckman Coulter (BC +8.2%) for approximately $6.8 bln in cash while Ensco (ESV -2.7%) is going to acquire Pride International (PDE +16.5%) for roughly $7.3 bln in a cash and stock deal. Those deals represent premiums of 45% and 21%, respectively, for shareholders of the acquired companies.

Moving on to the economy, there was better news in the weekly initial claims report. Claims for the week ending February 5 declined by 36,000 to 383,000 (Briefing.com consensus 410,000), which is the lowest level since July 2008. That dropped the 4-week moving average to 415,500 from 431,500

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The major indices logged another weekly gain, with the S&P 500 climbing 1.0% after posting modest gains in four of the five sessions. The S&P 500 and Dow hit fresh two year highs, while the Nasdaq hit a three-year high and is 30 points away from its 2007 high. Overall it was a relatively slow week, with energy stocks acting as the primary driver of this week's gains.

Eight of the 10 sectors advanced. Energy (+3.7%) led the way as oil gained 0.7% and a dividend hike from ConocoPhillips (COP +7.0%).

ConocoPhilips rallied 7% after raising its quarterly dividend 20% to $0.66 per share, adding $10 bln to its share repurchase program and approving $13.5 bln in capex in 2011.

FedEx (FDX +3.0%) issued an earnings warning. But the stock managed to gain as the company cited rough weather.

Dell (DELL +10.5%) rallied on better-than-expected earnings results and guidance.

In economic news, retail sales increased 0.3% in January (Briefing.com consensus +0.5%). Excluding autos, they also rose 0.3% (Briefing.com consensus +0.6%). The January figures followed on the heels of downward revisions for December, which showed total retail sales up 0.5% (prior +0.6%) and retail sales excluding autos up 0.3% (prior +0.5%).

Retail sales have now risen seven months in a row.

The Producer Price Index increased 0.8% in January (Briefing.com consensus +0.7%) on top of a downwardly revised 0.9% increase in December. Core prices, though, were up a stronger than expected 0.5% (Briefing.com consensus +0.2%), which was the largest rise since October 2008.

Core prices exclude food and energy. The jump in January was attributed primarily to the index for pharmaceutical preparations, which was up 1.4%, and higher prices for plastic products.

The January figures left total PPI up 3.6% year-over-year and core PPI up 1.6%.

The Consumer Price Index for January validated the last point. Overall prices rose 0.4% while core prices, which exclude food and energy, increased 0.2%. The Briefing.com consensus estimates called for increases of 0.3% and 0.1% respectively.

Increases in the food and energy indexes accounted for over two thirds of the all items increase, according to the Bureau of Labor Statistics.

On a year-over-year basis, total CPI is up 1.6% and core CPI is up 1.0% versus 1.5% and 0.8%, respectively, in December. This is an encouraging uptick that supports a disconnect from a trend of disinflation.

Separately, initial claims for the week ending February 12 jumped 25,000 to 410,000. That was close to the Briefing.com consensus estimate of 408,000 and left the 4-week moving average fairly steady at 417,750.

In commodities, silver climbed to a thirty year high and the CRB Index climbed 1.2%.

The U.S. stock and bond market is closed Monday in observance of President's Day.

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The S&P 500 broke a three week winning streak, falling 1.7% as unrest spreads in the Middle East and North Africa. Massive unrest in Libya, a major oil producer, sent stocks tumbling and crude oil prices rallying as its leader Gaddafi reacted violently to protesters instead of stepping down as in the case of Egypt. Meanwhile, Treasury prices rose in a safety trade.

The holiday shortened week got off to a negative start Tuesday following the unrest in Libya. The S&P then fell modestly Wednesday and Thursday, but recouped a portion of the weeks losses Friday.

Nine of the 10 sectors fell. Cyclical sectors industrials (-3.3%) and materials (-3.0%) underperformed.

The energy sector, however, gained 1.1% as crude oil prices spiked 14% to $98.27, hitting as high as $103.41. Libya produces around 2% of the worlds crude oil and Saudi Arabia pledged to match any output declines. Still, speculation of sabotage by Gaddafi and the prospect of production halts spreading to another major oil producer was enough to send prices sharply higher.

The gains in oil stocks were offset by losses in crude intensive industries. FedEx (FDX -8.6%) and Southwest Airlines (LUV -6.2%) both saw notable declines.

In corporate news, Hewlett-Packard (HPQ -12.3%) tumbled after its upside earnings surprise was ignored because of a light revenue figure and a disappointing forecast.

Wal-Mart (WMT -6.6%) came under pressure after domestic sales came in below expectations.

On the upside, General Mills (GIS +2.9%) and DirecTV (DTV +3.9%) both gained after DTV topped estimates and GIS reaffirmed its fiscal year 2011 guidance.

A risk trade propped up Treasuries. The yield of the 10-year note fell from 3.58% to 3.41%, the biggest weekly drop since May 2010.

The flight to safety also lifted precious metals, but dinged industrial and agriculture commodities.

In economic news, fourth quarter GDP was revised downward to reflect growth of 2.8% after the advance reading showed a 3.2% growth rate. Economists polled by Briefing.com had expected, on average, growth of 3.3%.

Initial jobless claims for the week ended February 19 totaled 391,000, which is down 22,000 from the prior week and less than the 410,000 consensus. Continuing claims came down 145,000 from the prior week to total 3.79 million.

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The S&P 500 ended the week flat after a sharp fall Tuesday was offset by a sharp increase Thursday. Oil prices hit two year highs on the continued turmoil in Libya and the Middle East, while gold hit a record high. U.S. economic data continues to paint a picture of recovery as private employers hired more than 200,000 people in February.

Most of the sectors settled in a tight range near the unchanged mark. Health care was the top gainer, up 2.4%, while financials acted as the main drag with a loss of 1.6%.

In corporate news, heavyweight Apple (AAPL) rose 3.0% as the company unveiled its new iPad.

In economic news, the employment situation continues to slowly improve. Private employers added 222,000 jobs in February, topping expectations and more than enough to offset a decline in public payrolls, with overall payrolls increasing 190,000. The unemployment rate unexpectedly ticked down to 8.9% from 9.0%.

In economic news, the ISM Service index rose to 59.7, the highest level since 2005. On a related note, the ISM manufacturing Index hit a multi-year high of 61.4, exceeding the Briefing.com consensus of 60.5.

Fed Chairman Bernanke delivered his semi-annual policy report to lawmakers. He was optimistic about the economic outlook but made no real revelations.

Meanwhile, unrest in the Middle East continues to stir up the commodity market. Oil prices rallied 7.3% hitting a multi-year high of $105.17 per barrel. Gold increased 1.6% to an all-time nominal high of $1441 per ounce.

The Treasury market and the dollar also saw volatility but essentially ended the week flat. The dollar saw some weakness after ECB President Trichet said that the ECB may raise interest rates as soon as next month to quell inflation. Note that the ECB has a single mandate of inflation targeting so the move is not necessarily going to be followed by the Fed.

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The S&P 500 ended the week lower as declines in heavyweight energy and tech stocks acted as a drag. Stocks pared some of the week's losses Friday even as overseas markets declined after Japan was hit by the fifth largest earthquake since 1900. Headline risk continues to drive volatility in the markets, especially in the commodity sector.

Six of the 10 sectors traded lower. Energy (-3.5%), materials and technology posted the biggest declines. Defense sectors outperformed, with telecom boosted by some M&A speculation.

Energy and material stocks fell as oil and other commodities took a sharp hit. Crude oil prices fell 3.6% and the CRB Index shed 3.1%.

Tech companies as a whole fell, with notable weakness in semiconductors (-5.5%) and equipment makers (-5.5%). Heavyweight Apple (AAPL) and Google (GOOG) fell 2.2% and 3.8%, respectively.

Company specific news acted as the main drivers of the top performing stocks this week. Starbucks (SBUX 10.4%) surged after the company announced a strategic relationship with Green Mountain Coffee (GMCR 41.0%).

In M&A news, Western Digital (WDC 14.6%) rallied on word that it will purchase Hitachi's (HIT -3.5%) storage business. The prospect of less competition also lifted up rival Seagate (STX 8.9%). Sprint Nextel (S 15.2%) spiked on reports that it is in talks regarding a potential merger with T-Mobile USA, which is owned by Deutsche Telecom.

The week was light on economic data. Initial jobless claims were worse than expected and retail sales met consensus.

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It could have been worse. That is the lingering thought entering the weekend after an active week of trading dictated by a dynamic flow of scary-sounding headlines related to Japan's nuclear crisis and the unrest in the Middle East that had the S&P 500 down as much as 4.2% at its worst level of the week.

Fortunately, a nuclear meltdown at the Fukushima complex continues to be averted along with a proliferation of Libya's civil war to other key oil-producing states in the Middle East, namely Saudi Arabia.

Yet, while the worst-case scenarios were avoided in both situations, it is a stretch to say market participants are at ease heading into next week. There is a palpable air of uncertainty regarding the geopolitical environment that can turn sentiment in a hurry if developments take a turn for the worse in Japan, the Middle East and, lest we forget, the European Union, which continues to grapple with its sovereign debt problems.

Faced with the thought of a nuclear meltdown, though, it is understandable that the sovereign debt problems in Europe would be relegated to a back burner issue. There are, as one might put it, more important matters to deal with.

There was little mistaking that Japan's troubling situation at the Fukushima nuclear complex was the focal point for the capital markets this week, along with the rebuilding effort that lies ahead for Japan. Those issues manifested themselves in the Volatility Index (VIX), which spiked as much as 55% this week, and in the Japanese yen, which hit a record high of 76.35 against the dollar.

By the same token, those very items provided a glimpse of the relief trade that was established in the latter part of week. Specifically, the VIX Index closed 22% off its high on Wednesday (though still up 22% for the week), while the yen weakened to 80.88.

Those "relief" trades were catalyzed by several factors: (1) G7 finance ministers and central bankers announcing a coordinated intervention to stem the yen's strength (2) Libya announcing an immediate cease fire in the wake of the UN approving a no-fly zone resolution that was all but certain to lead to an attack on Libya's air defense systems and (3) Japan's ability to prevent a worst-case scenario of a nuclear meltdown.

Not to be forgotten in the relief mix was a decision on Tuesday by the FOMC to leave its monetary policy unchanged, including its intention to carry out a $600 bln bond purchase program through June, a vote by Congress to pass a 3-week continuing resolution for federal government spending, and word that certain banks have been permitted to raise dividends, and subsequently did, after the Federal Reserve conducted another stress test.

The economic releases this week fell to the mixed side, with a very disappointing Housing Starts and Building Permits report for February offset by a remarkably strong Philadelphia Fed Index for March.

As expected, the PPI and CPI reports brought some headline surprises that were driven by rising food and energy costs, but core prices were contained in both reports, demonstrating that there hasn't been much pass through of the higher food and energy costs to other areas. It is evident that inflation is picking up overall, but for the core gauges the Fed watches, there is nothing in the data that would lead one to think the Fed is on the cusp of a major change in its monetary policy.

Next week the Existing Home Sales and New Home Sales reports for February will be the featured items on the economic calendar.

Remarkably, for all of the talk about global economic slowdown concerns that permeated the market this week, several cyclical sectors were among the relative strength leaders, including energy (+0.5%), basic materials (+0.01%), financials (-1.5%), and industrials (-1.6%).

As the aforementioned performance list indicates, relative strength this week was oriented more in terms of which sectors went down the least versus which sectors went up the most.

The S&P 500 ended the week down 1.9%. That isn't great, but pitted against the challenges of a potential nuclear meltdown, escalating violence in the Middle East and North Africa, a Moody's downgrade of Portugal's debt, and lousy housing starts data in the U.S., it could have been -- and might have been expected to be -- a whole lot worse.

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The S&P 500 continued its rally, advancing 1.4% on the week amid broad-based gains. The stock market's resilience is underpinned by the fundamental forces of low interest rates, low inflation, strong earnings, healthy corporate balance sheets, and accommodative Fed policy, which have helped expose the relative value of U.S. equities versus the Treasury market and other stock markets.

The advance this week sent the S&P 600 SmallCap Index past its prerecession high (also a lifetime high), joining the Nasdaq 100 and the S&P 400 MidCap Index.

Nine of the 10 sectors advanced, with all nine rising at least 1%. The tech sector underperformed, down 0.1%.

Telecom led the way, spiking 4.2% as AT&T (T) gained as investors continued to evaluate the impact of the merger agreement between AT&T and T-Mobile.

In other M&A news, Nasdaq OMX (NDAQ) rallied 9.3% after teaming up with IntercontinentalExchange (ICE) to make an $11.3 billion rival bid for NYSE Euronext (NYX). The value of the potential deal is 19% above Deutsche Boerse's offer.

The focal point in terms of economic data this week was the March employment report. Most aspects of the report were encouraging. Nonfarm payrolls rose by 216,000 (Briefing.com consensus 185,000) while private sector payrolls jumped 230,000 (Briefing.com consensus 203,000). Nonfarm payrolls for January and February were revised slightly higher, too.

One striking feature of the nonfarm payrolls gain is that it was fairly broad-based, led by a 78,000 increase in professional and business services, a 45,000 increase in education and health services, a 37,000 increase in leisure and hospitality, and a 17,000 increase in manufacturing.

The unemployment rate ticked down to 8.8% from 8.9%.

In commodity trading, crude oil gained 2.0% while gold advanced 0.2%. The dollar index fell 0.4%.

The 10-year Treasury yield was largely unchanged from the prior week.

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The S&P 500 shed 0.3%, in relatively subdued trade. The modest decline follows a steep 4.2% gain in the previous two weeks.

Seven of the 10 sectors fell, with industrials shedding 1.4%. Consumer staples posted the largest gain, up 1.1%.

Commodity prices rallied, with silver spiking 8.5%, crude advancing 4.8% and gold gaining 3.3%. Meanwhile, the dollar index fell 1.3%, with the dollar hitting a fresh 52-week low against the euro.

In corporate news, Texas Instruments (TXN) is going to buy National Semiconductor (NSM) for $6.5 bln, an 80% premium.

NSM spiked 68% and was the top gainer. Retailers also were among the week's best performing stocks on upside reports.

On the downside, oil sensitive stocks took a hit. Southwest Airlines (LUV) shed 7.8%.

In overseas news, the ECB raised its benchmark lending rate by 25 bps to 1.25%, as expected. Portugal requested aid from EU officials, also as expected.

Back in the U.S., the looming threat of a government shutdown had a limited impact on stock trading.

The coming week marks the unofficial start to first quarter earnings season with Alcoa (AA) reporting on Monday after the close.

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The S&P 500 posted a modest loss as first quarter earnings reporting season kicked off. Earnings results came in mixed, and many companies faced selling pressure despite posting in-line or better-than-expected EPS figures.

Dow component Alcoa (AA) sent earnings season off to shaky start despite the company posting its fourth consecutive EPS beat. Shares of Alcoa came under pressure following a light revenue figure.

Two banking giants posted mixed results. JPMorgan Chase (JPM) topped estimates, while Bank of America (BAC) missed expectations. The financial sector fell 2.0% for the week.

Shares of Google (GOOG) got hammered after the company posted essentially in-line earnings and topped revenue expectations. Higher operating cost appeared to drive the selling efforts, sending shares down 8.2% for the week. The tech sector slipped 1.1%.

The 33 S&P 500 companies that have reported so far have posted sales growth of 7.3% y/y and earnings growth of 38% y/y.

The energy sectors posted the largest decline of 3.1% as crude prices slipped 3.0% to $109.45 per barrel. Even with the decline, energy is the best performing sector year-to-date with a gain of 13.1%.

In economic news, initial jobless claims for the week ended April 9 increased 27,000 to 412,000, worse than the forecast of 385,000.

The coming week brings quarterly results from a bevy of widely held names. The major banks will report, including Citigroup (C), Goldman Sachs (GS) and Morgan Stanley (GS). More than 10 Dow components are scheduled to report, including IBM (IBM), Intel (INTC), and General Electric (GE).

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A shortened but busy week led to volatile trade for U.S. equity markets, but earnings-induced rallies on Wednesday and Thursday helped the S&P 500 gain 1.3%.

The week began on the wrong foot. Futures were already pointing to a lower open Monday morning when Standard & Poor's lowered its outlook on the AAA credit rating of the U.S. to negative.

The announcement should not have come as a shock to investors, but it did provide an adequate excuse to sell a market that had been struggling of late to break out to new highs. Strikingly, the selling was more measured in Treasuries and the dollar. Both regained their post-announcement losses, with the greenback even extending to fresh highs. U.S. equity markets also managed to rebound somewhat from the session's lows.

First quarter earnings results took center stage beginning on Tuesday, and with seemingly every company exceeding expectations, the major averages managed to build off Monday afternoon's rebound and surge higher.

While there had been underperformers earlier in the week, such as Texas Instruments (TXN) due to its operations in Japan, a large batch of strong results on Wednesday from the likes of Intel (INTC), United Technologies (UTX), Yahoo! (YHOO), and Freeport-McMoRan (FCX) sent U.S. markets spiking higher.

It was more of the same Thursday, the last session of the week due to the Good Friday holiday. Outperformers included Apple (AAPL), Capital One (COF), Qualcomm (QCOM) and UnitedHealth (UNH).

Among the sectors, eight of the 10 gained this week, led by technology (+3.0%), materials (+2.8%) and energy (+2.4%). Telecom (-0.7%) and financials (-0.2%) were the only decliners.

Changing gears, the economic calendar was light this week, mainly focusing on housing data for March. Those results came in positive as Housing Starts, Building Permits and, more importantly, Existing Home Sales all exceeded their Briefing.com consensus estimates. To the downside, Initial Jobless Claims remained above 400,000 for a second straight week.

The economic calendar picks up next week, led by the Advance GDP Report on April 28. The day before, the FOMC will conclude a two-day meeting. And earnings results will continue at a rapid pace, with companies such as Coca-Cola (KO), Ford Motor (F), UPS (UPS), Amazon.com (AMZN), Boeing (BA), Dow Chemical (DOW), Exxon Mobil (XOM), Procter & Gamble (PG), Microsoft (MSFT) and Caterpillar (CAT) all reporting.

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The S&P 500 gained 1.9% as most companies continue to top earnings expectations and first quarter GDP grew at a slightly faster-than-expected pace. As stocks gained, the dollar fell, gold hit a new record and oil prices rose to a fresh multiyear high.

Buying interest was broad-based with all 10 sectors advancing at least 1%.

Commodity prices rallied, with silver spiking 3.8%, crude advancing 1.2% and gold gaining 3.7%. Meanwhile, the dollar index fell 1.2%. Year-to-date gold is up 10%, oil is up 24% and silver has rallied 55%. Meanwhile, the dollar has fallen 7.7%.

The week was extremely earnings heavy, with nearly 150 S&P 500 companies releasing their quarterly results. 3M (MMM) hit an all-time high following its upside report and forecast.

Amazon.com (AMZN) rallied to a new record following its earnings beat. Exxon Mobil (XOM) garnered attention after posting a $11 bln quarterly profit, which was slightly ahead of estimates.

Research In Motion (RIMM) took a pounding as the maker of BlackBerry devices lowered its profit forecast.

About 300 S&P 500 components have reported first quarter earnings, 74% have posted an upside surprise. Earnings are now expected to grow 16% this quarter, an increase from the 11.5% estimate at the beginning of the quarter.

In economic news, first quarter GDP rose at a seasonally adjusted annual rate of 1.8%, slightly ahead of the Briefing.com consensus of 1.7%. An increase in imports, a slowdown in personal spending growth and a decrease in federal government spending resulted in the deceleration of GDP growth relative to prior quarters.

The FOMC left the benchmark unchanged at between 0.00% and 0.25%, as expected. The Federal Reserve trimmed its 2011 growth forecast range by about 40 basis points. On a positive note, the Fed also decreased its unemployment expectations, now forecasting a range of between 8.4% and 8.7%.

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The stock market gave up some of the past weeks' gains as commodities got clobbered and the dollar rallied on fears of slower global growth. On the upside, U.S. private companies added the most jobs since February 2006 and the drop in oil prices will be a positive for consumers.

Commodities took a beating this week, with the CRB Index shedding 9.0%, crude tumbling 14.1% and silver plummeting 27%. The decline in silver was largest weekly percentage fall on records dating back to 1984. After this week's sell off, the 1.4% year-to-date gain of the CRB Index is less than the 6.6% gain of the S&P 500.

The dollar rallied as commodities fell, advancing 2.5% in its best weekly gain since August. The euro showed the most weakness. ECB President Trichet made more dovish than expected comments and there were reports that Greece may be leaving the euro currency.

The selling interest in U.S. equities was focused on the energy and materials sectors. Energy plunged 7.0% and materials gave up 3.4%. Defensive sectors outperformed on a relative basis with healthcare up 0.6% and Utilities advancing 0.3%. Healthcare is now the best performing sector year-to-date, up 12.4%.

In economic news, the April employment report showed solid job growth as private employers created more than enough jobs to offset the decline in government payrolls. Overall payrolls increased 244,000, well above the Briefing.com consensus of 175,000. Private payrolls were up 268,000, topping the Briefing.com consensus of 200,000 and the highest level since February 2006.

There was a discrepancy between the payroll numbers and the unemployment rate, however. The unemployment rate, which is based off a household survey, showed an uptick to 9.0% from 8.8%.

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The stock market traded in a range-bound fashion, ending the week with a slight loss. Commodities posted slight gains and the dollar rallied.

Trading action within the S&P 500 was mixed, with half of the 10 sectors posting a gain. Defensive sectors outperformed, with consumer staples up 2.1% and utilities climbing 1.8%. The financial sector led the way lower, shedding 2.1% with notable weakness in heavyweight banks. The financial sector is now in negative territory for the year.

In corporate news, Cisco's (CSCO) earnings report and guidance once again disappointed investors. Shares of the tech giant gave up 3.9%. Shares of Cisco are down 34% of the past 12 months, making it the third worst performing S&P 500 component.

Microsoft (MSFT) made an $8.5 bln cash offer to acquire Skype in a move to expand the software giant’s presence in the VoIP market.

Disney (DIS) shed 3.6% after posting disappointing earnings.

Economic data were in-line to slightly disappointing, though not enough to move expectations.

Initial claims for the week ending May 7 fell 44,000 to 434,000 consensus 423,000 while continuing claims for the week ending April 30 held fairly flat at 3.756 mln consensus 3.700 mln.

In brief, the latest claims reading is still on the wrong side of 400,000, yet the market appears to be somewhat patient with the idea that more improvement will be seen as more time expires between the weekly reading and the unusual factors in April that biased things in a negative manner.

Retail sales and inflation data largely met expectations.

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The stock market ended the week with a loss after being unable to sustain a midweek recovery effort. Tech stocks pushed the market lower after Hewlett-Packard disappointed investors and concerns over European debt continues to hurt investor confidence. The decline this week marked the S&P 500's third consecutive loss.

Four of the 10 sectors advanced, led by energy (+0.9%) and utilities (+0.6%). The heavyweight tech sector underperformed with a loss of 1.5%.

In corporate news, Hewlett-Packard (HPQ -11.0%), Home Depot (HD 0.1%) and Wal-Mart (WMT-0.8%) all underwhelmed with their earnings reports. That's not to say they missed expectations altogether. In fact, they all topped earnings estimates for their reported quarter, but some element of their guidance -- either sales or earnings or both -- failed to lift investors' spirits.

Hewlett-Packard's shares came under pressure and played the primary role in the underperformance of the tech sector this week. Its guidance for the fiscal third quarter and full year was below current consensus estimates and was blamed in part on continued softness in sales of consumer PCs. The Dow component was forced to move up its earnings report date due to a leaked memo from the CEO who reportedly told staffers the company faces another tough quarter and that current headcount plans are unaffordable.

Dell (DELL -2.2% ) limited its losses this week despite the HP news after posting better-than-expected earnings and guidance.

Analog Devices (ADI 2.5%), Deere & Co. (DE -3.4%), Abercrombie & Fitch (ANF -0.1%), and Target (TGT -3.6%) all reported quarterly earnings that exceeded consensus estimates.

Retailers saw some selling pressure. Staples (-19.2%) had the largest percent decline in the S&P 500 followed by Gap (GAP -16.6%) after the retailers each reported disappointing earnings/guidance.

In M&A news, Barnes & Noble (BKS 31.1%) received a $17 per share buyout offer from Liberty Media.

Shares of social networking company LinkedIn (LNKD 109%) soared 109% in its public debut. Excluding ADRs, the one-day return marked the second highest IPO in the last 10 years ? Nymex Holdings rallied 125% its first day in 2006--but ranks only 157th in the last 30 years-- VA Linux tops the list with a gain of 698% in 1999. Excluding the tech bubble years, LinkedIn's one-day return ranks 18th.

In economic news, initial claims for the week ended May 14 were better than expected, falling 29,000 to 409,000 (consensus 420,000). Continuing claims for the week ended May 7 fell by 81,000 to 3.711 mln (consensus 3.713 mln).

The claims level is still on the wrong side of 400,000, yet the rapid drop from the 478,000 claims reported on April 30 suggests the poor seasonal adjustment factors in April are working their way out of the system. We expect claims to move back toward the 380,000 level in the next few weeks; however, it is possible the effects of the flooding could forestall that move.

The yield of the 10 year Treasury note fell to a fresh 2011, but bounced higher a bit following the release of the FOMC meeting minutes to eventually settle the week largely unchanged at 3.15%. The recent moves in Treasuries have been primarily driven by inflation expectations.