Morningstar Indexes: Weekly Market Report

Markets continue to scale new highs. The Morningstar US Market Index rose 0.94% for the week ending May 18, scoring its seventh straight positive week. Merger and acquisition activity remains a key booster of investor sentiment, while strong quarterly earnings reports have provided added support.

Large-cap stocks did sharply better this week, as demonstrated by the performance of Morningstar's nine style indexes. The Morningstar Large Value Index was by far the leader, posting a 2% gain. The Morningstar Small Core Index finished last with a 0.82% loss.

Energy stocks strongly contributed to the Morningstar Large Value Index, as rising oil and gasoline prices caused anticipation of bumper profits for these companies. ExxonMobil XOM, which rose 2.5%; ConocoPhillips COP, up 7.2%; and Chevron CVX, up 4.25%, were among the top contributors. Telecom stocks also had a strong week, led by the 3.8% gain by AT&T T.

The week's best individual stock performance came from online marketing and advertising services provider aQuantive AQNT, which surged 84% after Microsoft MSFT announced it would purchase the company. AQuantive is Microsoft's largest purchase ever and follows similar acquisitions by prominent Web rivals in recent weeks. Despite aQuantive's massive gain, small-cap stocks were undermined by stock-specific stumbles such as Kaiser Aluminum KALU. Kaiser's stock fell 13.6% after reporting a slide in profits due to higher costs.