What a Week: Markets Tread Water, but at Least They Were Mostly Above Water - TheStreet

NEW YORK -- For those who prefer clear answers, clarity and decisiveness, Wall Street was pretty much a wasteland this week.

But that's not to say the period was uneventful.

Wednesday's

ruling on the

Microsoft

(MSFT) - Get Report

antitrust case pretty much assured the week a place in history. Meanwhile, several large-cap companies reported disappointing results, or warned thereof.

But there wasn't enough data to provide a clear indication about the direction of the economy and the

Federal Reserve

. Thus, it's not surprising major equity averages pretty much slogged through the week.

"The big news was

last week and so was the big market move," said Thomas Van Leuven, equity strategist at

J.P. Morgan

. "Having a market that just treaded water

this week seems like a fairly reasonable outcome."

The

Dow Jones Industrial Average

fell 1.7% for the week and the

S&P 500

shed 1.4%. Meanwhile, the

Nasdaq Composite Index

rose 1.6% and the

Russell 2000

gained 2%.

Monday set the tone as equity averages moved modestly and ended mixed. Beneath the surface, another trend emerged that lasted throughout the week. Namely, former momentum favorites such as

Ariba

(ARBA)

and

Genetech

(DNA)

posted big gains.

Stock gauges fell across the board

Tuesday, as a profit warning from

Electronics for Imaging

(EFII) - Get Report

and slowing sales growth at

Circuit City

(CC) - Get Report

helped stem the appeal of stocks.

Circuit City's news confirmed a growing sense the economy is slowing and that the Fed might not tighten aggressively in the coming months. However, while retailers were imploding, oil and service stocks rose sharply amid expectations global economic growth will remain robust. Additionally, financial stocks got smacked, in part by fears the economy may not be slowing so much, after all.

In other words, the session was a wash. Fittingly, it rained in Manhattan.

To Microsoft and Beyond

Stocks advanced

Wednesday as the media held its collective breath ahead of Judge

Thomas Penfield Jackson's

decision in the Microsoft case, which couldn't have been less surprising.

As such, the market impact of the decision was muted

Thursday. However, the Dow suffered its worst session of the week, falling 1.3%, after

Procter & Gamble

(PG) - Get Report

announced a shakeup of its management and preannounced another earnings shortfall.

Land's End

(LE) - Get Report

also warned that jobless claims rose more than expected, lending further credence to the slowdown argument.

While blue-chips staggered -- financials suffered again -- some investors kept a focus on once-hot sectors, such as superconductors.

Friday brought the week's big economic news, the

Producer Price Index

for May. Appropriately, the report was mixed, fueling additional confusion on Wall Street.

"The market is just biding its time, looking for direction," said Donald Fine, chief market analyst at

Chase Asset Management

. "Most people feel the Fed is not going to do anything in June, but need more confirmation" about the August meeting.

Further keeping with the week's theme, big-cap companies

EDS

(EDS)

and

McDonald's

(MCD) - Get Report

were saddled with disappointing results while smaller favorites, such as

MicroStrategy

(MSTR) - Get Report

and

Affymetrix

(AFFX)

, enjoyed huge gains.

The pessimistic spin on the week is that conviction remains elusive, as evident by still lackluster trading volumes. Additionally, the dramatic re-emergence of second-tier tech and biotech names has some fretting the downturn in March and April did not eradicate speculative excess.

The optimistic take is that major averages -- particularly the Nasdaq -- held up remarkably well in the aftermath of the prior week's huge gains. Additionally, most of the big news events -- both corporate and economic -- pointed to the veracity of the slowdown scenario. Finally, for those who believe skepticism is a necessary ingredient to a rising market, there's plenty of that to go around as well.

J.P. Morgan's Van Leuven referred to a recent report in which the firm argued the market has "no valuation cushion" should bond yields rise, and concluded "the endgame of the current process of monetary tightening is financial pain."

Chase's Fine also sees more tightening in the offering, casting doubt on the belief the economy could make the complete U-turn necessary to slow down from its once-torrid pace.

"I don't think the stock market is going to fall apart," he said. "I just see the potential for further increases somewhat limited."

In other words, more weeks like the one just passed.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

taskmaster@thestreet.com .