Weekly Market Recap: Alcoa and Google Ignited Earnings, Oil Storms Back

Dow 11,644 S&P500 1,224 Nasdaq 2,479 Gold 1,680 Oil 87

The Dow (NYSE:DIA), S&P (NYSE:SPY) and Nasdaq (NASDAQ:QQQ) all had a phenomenal week after earnings got off to a reasonable start and Europe continued to address the necessary bank bailouts. On the commodities front, Oil (NYSE:USO) jumped $5 and Gold (NYSE:GLD) rallied again.

Hot Feature: Is Gold Good for Society?

Now, for our analysis of the 12 reasons markets moved this week:

Monday

1) Bank recapitalization. German Chancellor Angela Merkel and French President Nicolas Sarkozy have both pledged to have a plan in place within a month to recapitalize European banks in order to “assure growth and financing,” according to Sarkozy, who spoke from Berlin yesterday. Merkel said European leaders will do “everything necessary” to ensure that banks have enough capital. Sarkozy said Sunday that he and Merkel would deliver a recapitalization plan by the next Group of 20 summit, scheduled for November 3. Investors are viewing the plan as a solid resolution to the euro zone’s banking and sovereign-debt troubles.

2) Economy. A string of positive economic data has economists saying the U.S. has likely dodged a double-dip recession. Following Friday’s Labor Department report that the economy added 103,000 net jobs last month, economists at Goldman Sachs (NYSE:GS) and Macroeconomic Advisers LLC raised their forecasts for third-quarter growth to 2.5%, up from about 2% — that’s nearly double the second quarter’s 1.3% rate of growth. Construction spending jumped in August, manufacturing accelerated in September, and some of the biggest drags on the economy during the first half of the year, namely higher gasoline prices and supply-chain disruptions from the earthquake and tsunami in Japan, are dissipating, all reasons why economists are saying that U.S. economy has skirted another recession.

3) Tech. Netflix (NASDAQ:NFLX) shares led the technology sector higher today after the company announced that it no longer plans to split its DVD-delivery service and streaming business. Apple (NASDAQ:AAPL) shares also climbed on news that the new iPhone 4S had received over one million pre-orders in just one day, far exceeding the previous record of 600,000 set by the iPhone 4. Yahoo (NASDAQ:YHOO) rose after Reuters reported that co-founder and former CEO Jerry Yang is considering a deal to take the company private

Tuesday

1) Slovakia and Greece. Slovakia didn’t approve the EU bailout fund, but global leaders will keep the pressure on for another vote. In Greece, bondholders are awaiting a huge loss on their investments as Greece systematically defaults on different tranches of debt.

2) Banks. The Volcker Rule is now on display for comments. Banks (NYSE:KBE) are ready to put their comment cards in the suggestion box as the industry wants to keep regulations out of the way. Bank of America (NYSE:BAC), Citigroup (NYSE:C), JP Morgan (NYSE:JPM), Wells Fargo (NYSE:WFC), and Goldman Sachs (NYSE:GS) will undoubtedly have plenty of feedback about barring them from short-term trading for their own gains and investing in hedge funds or private equity funds.

3) Earnings Season. Earnings season is under way as Alcoa (NYSE:AA) broke the seal after hours. The aluminum company grew revenues 20%, but fell short on analyst expectations for profits. Here’s Your Cheat Sheet to Alcoa Earnings >>

Wednesday

1) Europe. European Commission president José Manuel Barroso today urged policymakers to act immediately to resolve the euro zone’s sovereign debt crisis, saying that banks should temporarily raise capital reserves, and that those not satisfying capital requirements should be barred from paying out dividends and bonuses. Meanwhile, Slovakia, the last holdout in the 17-member euro zone, is now expected to pass a measure to increase the powers of the European Financial Stability Facility, increasing the fund’s effective lending capacity to 440 billion euros, giving it the power to inject capital into banks, and allowing it to buy the bonds of distressed governments on the open market.

2) Fed. Minutes from a Federal Reserve policy meeting September 21-22 were released today, showing that policymakers are considering a third round of bond purchases, or QE3, in the near future. Of course, the Fed ultimately decided to shift $400 billion of its investments to longer-term Treasuries, but today’s report shows that the Fed might at least be open to QE3 in the future. 

3) Banks. Markets climbed into the green again today for the first time since August 31 as they continued to rally from their October 3 low. Leading them to those gains were financials. All 10 groups in the Standard & Poor’s 500 Index rose, with Wells Fargo (NYSE:WFC) adding 3.45% and Citigroup (NYSE:C) adding 4.96%, following European lenders higher. Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM), Barclays (NYSE:BCS), Goldman Sachs (NYSE:GS), and Morgan Stanley (NYSE:MS) were also trading higher today. 

Friday

1) Europe. European officials have begun to outline a rescue plan that could include steeper losses for investors in Greek bonds, higher capital requirements for banks, and increased firepower for bailouts and the International Monetary Fund. Finance ministers and central bankers from the Group of 20 began talks in Paris today, discussing how best to combat Europe’s spreading sovereign debt crisis. They may complete the plan at an October 23 summit and present it to a gathering of G-20 chiefs November 3-4.

2) Retail. U.S. retail sales rose more than forecast in September in their biggest monthly advance since February. The 1.1% advance last month followed a 0.3% gain in August that was higher than previously estimated, according to a Commerce Department report issued today in Washington.

3) Tech. Apple (NASDAQ:AAPL) is trading higher as the new iPhone 4S looks set to break all sales records set by previous iPhones. Most analysts are expecting 2 million to 3 million to be sold this weekend alone, while a few venture to say as many as 4 million will be sold. News that Comcast (NASDAQ:CMCSA), News Corp. (NASDAQ:NWSA), and Walt Disney (NYSE:DIS) will be holding onto their streaming video service, Hulu, gave each a boost. The media giants finally accepted what the public has known for some time — that the site’s strategic value outweighs any monetary benefits of a sale.

Don’t Miss: Inside Apple’s Upcoming Quarterly Earnings Release.