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Morningstar Indexes: Weekly Market Report

Week ending April 20: Blue chips post strong first-quarter earnings.  

Morningstar Indexes, 04/23/2007

Markets surged last week as blue-chip stocks posted surprisingly strong first-quarter 2007 results. The Morningstar US Market Index rose 1.95% for the week ending April 20. Financial services stocks were among the best performers as markets got first-hand evidence of these companies' overall earnings power despite problems in the home-lending segment. Prominent U.S. multinational companies also reported robust earnings for the quarter, boosting the market's confidence that a healthy global economy can compensate for a slowdown in the U.S.

All nine Morningstar style indexes finished in positive territory. The Morningstar Large Value Index claimed top honors with a 2.39% gain, while the Morningstar Large Core Index finished a close second. The Morningstar Small Growth Index came in last with a 0.5% advance.

Blue-chip financial firms J.P. Morgan Chase & Co. JPM (which led with a 7% gain), Citigroup C, and Washington Mutual WM were the prominent contributors to the Morningstar Large Value Index. All three stocks demonstrated strong performance in most parts of their diversified businesses, easily overcoming setbacks in consumer- and home-lending areas. Industrial stocks Caterpillar CAT and Honeywell International HON surged 8% and 9.3%, respectively, after reporting strong overseas sales.

Flash memory chipmaker Spansion's SPSN 16.8% slide took a toll on the Morningstar Small Growth Index. Spansion reported a worrisome decline in profit margins due to stiff price competition from technology giant Intel INTC.

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