05.05.2008 08:48

STOCKS: weekly review

U.S. stock indexes closed third week higher after a better-than-forecast jobs report and the $23 billion takeover of Wm. Wrigley Jr. Co. pushed the market to its longest streak of gains in seven months.The S&P 500 rose 1.2% this week. The measure has gained 6.1% in the past three weeks, paring its 2008 decline to 3.7%. The Dow Jones Industrial Average added 1.3%.

Technology, consumer and telephone stocks led the Standard & Poor's 500 Index to a four-month high, while raw material and energy producers declined as the dollar climbed. Wrigley had the steepest gain in more than two decades after Mars Inc., with financing by billionaire Warren Buffett, agreed to buy the world's biggest maker of chewing gum.

Sure, there was the news Monday that Mars is going to buy Wrigley (WWY) for approximately $23 billion and the news Tuesday that Mastercard (MA) had a blowout quarterly earnings report, but that, and other items like the FDA shooting down a new cholesterol drug from Merck (MRK), led to a James Bond-like trade in that the indices were shaken, but not stirred.

The stirring action was reserved for the latter part of the week, which brought the Q1 GDP report, the FOMC meeting and the April employment data. In addition, it also brought some noteworthy movement in the dollar and some volatile activity in the commodity arena.

The Fed appears to be feeling better about the economy's prospects, too. After cutting the fed funds rate Wednesday another 25 basis points to 2.00%, it issued a directive that was different in tone from prior directives. In particular, the directive omitted a prior reference to the idea that "downside risks to growth remain." Verizon Communications Inc., the second-largest U.S. phone company, said first-quarter profit jumped 9.8 percent as mobile- phone customers spent more on text messages and wireless Internet browsing. Verizon shares rose 6.9 percent to $39.59 this week.

Walt Disney Co., Cisco Systems Inc., Clear Channel Communications Inc. and Sara Lee Corp. are among S&P 500 companies slated to report quarterly results next week.