What a Week: Green Apple

As oil plunged, the markets embraced the Fed's pause, technology stocks and a strong U.S. economy to end the week on high note.

The Dow Jones Industrial Average made a second all-time high of the week Friday on the heels of stronger-than-expected retail sales report for December. The index finished the week up 1.3% to close at 12,556.08 on Friday. The S&P 500 closed up 1.5% for the week at 1430.73, a new six-year high. But the Nasdaq Composite had the most dramatic rise, climbing 2.8% in first full week of the year to a new six-year high.

Investors fell back in love with technology, as Apple Computer's(AAPL Quote) new iPhone symbolized high hopes for the sector. Cisco Systems(CSCO Quote) and the options backdating scandal interrupted the party. Cisco decided to sue Apple for trademark infringement, and the Washington Post and Wall Street Journal reported that federal regulators are investigating a 2001 options grant to CEO Steve Jobs.

Those issues, and profit-taking after a big run, weighed on Apple on Thursday and Friday, but the shares still rose 11.3% this week.

The bulls were further enthused by a strong start to earnings season with stronger-than-expected results and/or guidance from Alcoa (AA Quote), Genentech (DNA Quote) and Sears Holdings (SHLD Quote), most notably.

Meanwhile, the unwinding of last year's window-dressing continued. "Sectors that had been the strongest in 2006 and chased at year-end posted the worst results (energy, telecom, materials)," writes Brian Belski, U.S. sector strategist at Merrill Lynch. "Traditionally 'growthier' areas (discretionary, tech) outpaced deep cyclicals."