What a Week: Loose Lips

The markets were listless this week, as traders were eager to grab onto anything that smacked of a theme. Next week, it should be easier to find a theme as the Federal Reserve Chairman Ben Bernanke gives his semiannual testimony to Congress Wednesday and Thursday.

"Anything that was anything got magnified" this week, says James Paulsen, chief investment strategist at Wells Capital Management. Paulsen was referring to the subprime mortgage market's issues highlighted by HSBC Holdings(HBC Quote) on Thursday, and a few hawkish Fed speakers Friday.

Paulsen also noted a slight shift in sentiment this week, as traders backed away from the frothy enthusiasm that the economy is rolling along like a freight train without any obstacles.

Indeed, Treasury yields came back down this week, reflecting traders' reassessment of the economic outlook. "I can see the bearishness creeping up again," says Paulsen. The 10-year yielded ended the week at 4.78% after finishing up last week at 4.83%.

Ultimately, Friday's hawkish Fedspeak and another bad day for the semiconductor sector led the major averages to losses for the week.

Weakness in the Nasdaq Composite Friday was sparked by Micron Technologies'(MU Quote) warning that memory-chip prices will fall 30% to 40% this quarter. The Nasdaq Composite slid 1.16% Friday, and lost 0.6% on the week. Micron slipped 2.6% Friday.