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Morningstar Indexes: Weekly Market Report

Week ending Feb. 2: Stocks surge as Fed leaves rates unchanged.

Morningstar Indexes, 02/05/2007

The Federal Reserve left interest rates unchanged last week, endorsing the view of moderating inflationary pressure as the economy moves toward a soft landing. Stocks surged despite a 6.5% spike in oil prices. The Morningstar US Market Index gained 2% for the week ending Feb. 2.

All nine Morningstar style indexes were up strongly for the week. Value stocks extended their winning streak over growth stocks to a total of three weeks, chipping away another 0.24% from the growth index's early-year lead. The Morningstar Small Value Index was last week's top performer with a robust 2.9% gain. The Morningstar Large Core Index finished the week on the bottom, with a respectable 1.4% gain.

Shares of First Republic Bank FRC, a regional banking firm, rose 40% for the week after agreeing to be acquired by Merrill Lynch & Co. MER for a 44% premium. Another high-profile deal caught the interest of investors as newsprint producers Bowater Inc. BOW and Abitibi-Consolidated ABY agreed to a merger of equals. Bowater finished the week ahead by 24.6%.

Shares of wireless equipment maker Motorola MOT jumped 8% on the news that activist shareholder Carl Icahn acquired 1.4% of its outstanding shares, in an effort to obtain a seat on the firm's board of directors. Agriculture processor Archer Daniels Midland ADM shares jumped 11.9% last week after announcing impressive second-quarter results, citing improved margins in its corn-based products.

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