What a Week: Upbeat Finish

Those viewing the financial markets as cold, calculating and rational ought to consider this week as "Exhibit" A to the contrary.

After starting cautiously optimistic, the market's mood swung from confusion to excitement to fear, before ending with renewed hope on Friday. Weekly tallies reflect the market's emotional conflicts, with the Dow Jones Industrial Average up 0.5%, a sixth-straight weekly rise salvaged by Friday's rebound. The S&P 500 rose a fraction for the week while the Nasdaq Composite shed 0.4%, its first weekly drop since late March.

Wednesday's Federal Open Market Committee meeting was the week's literal and figurative crux. The Fed's decision to keep unchanged both rates and its formal tightening bias was initially greeted with mild disappointment. But traders took some solace in the Fed's forecast. "[T]he economy seems likely to expand at a moderate pace over coming quarters," the central bank said in its post-meeting statement, though it also conceded "economic growth slowed in the first part of this year."

Amid hopes for the so-called soft landing and merger speculation about Rio Tinto (RTP Quote) and OfficeMax (OMX Quote), the major averages hit their best levels of the week on Wednesday. The Dow's close of 13,362.87 was its fifth-straight record and the 21st of 2007. Previously, the Dow was aided by Alcoa's (AA Quote) $27 billion bid for Alcan (AL Quote) on Monday, and Hewlett-Packard's (HPQ Quote) raised guidance on Tuesday.

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