What a Week: Balky Bulls

Bulls found themselves swimming in a sea of joy this week as (mostly) upbeat economic, earnings and M&A news helped secure more milestones for stock proxies.

But even amid the Dow's string of record closes and multiyear highs for broader averages, skepticism about the rally remains high, suggesting the advance may not be done just yet.

For the week, the Dow rose 1.1%, ending Friday at 13,264.62, its seventh record close in the last eight trading days. The S&P 500 gained 0.8% for the week, closing Friday at 1505.62, its highest level since September 2000. The Nasdaq Composite rose 0.6% for the week and closed Friday at 2572.15, its best close since February 2001.

Most of this week's gains came Tuesday and Wednesday when the news flow was overwhelmingly positive, highlighted by News Corp.'s(NWS) blockbuster bid for Dow Jones(DJ), a private equity takeover of Cablevision (CVC), and stronger-than-expected earnings from the likes of MasterCard (MA) and Yum! Brands (YUM).

Such positive corporate news was augmented by stronger-than-expected reports on ISM manufacturing Tuesday and factory-orders data Wednesday. Thursday brought strength in ISM services and a better-than-expected report on first-quarter productivity, but those positives were offset by earnings tilted toward the negative.

A soft April jobs report Friday, meanwhile, was offset by news of another potential mega-merger: Microsoft's (MSFT) reported $50 billion bid for Yahoo! (YHOO), which jumped 10% on the speculation. Meanwhile, Reuters (RTRSY) soared 27% on news it has been approached by Thomson (TOC) about a possible combination.