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This Week's Market Review

With nearly two-thirds of the S&P 500 companies having reported earnings, the index showed an increase for the fifth straight week. Over 70% of the companies have reported above Wall Street expectations and it now appears that operating aggregate earnings will show an increase of nearly 18% to 19%, well above the third quarter gain of 14% during the third quarter of 2005. Estimates for the fourth quarter remain strong as well, with expectations for a gain of 11%. News for week included the Fed holding the fed funds rate target steady at 5 1/4% while releasing a bullish statement that core inflation, while elevated now, should moderate over time due to slower economic growth. Economic data showed that third quarter real GDP growth slowed to a 1.6% annual rate, mainly due to a 17% drop in residential contruction. Consumer spending rose at a healthy 3.1% annual rate, while business investment was up at an 8.6% rate. Oil prices rose this week to just over $60 per barrel while the yield on the 10-year note fell slightly to 4.67%. Going forward, the fundamentals remain bullish as interest rates are likely to remain steady for several months, and although economic growth is slowing, the sharp downturn in the housing sector isn't causing widespread weakness.

The DOW closed the week up, climbing 87.89 points to close at 12090.26. The S&P rose 0.6%, adding 8.74 points, ending the week at 1377.34. The NASDAQ increased 0.4%, gaining 8.32 points, ending the week at 2350.62.