Stocks ended the week just as they began it, by making very little noise. In between, however, shares roared and fell, making a cacophony that was nearly drowned out by the debate over its meaning, even as it pushed major proxies to a second-straight week of gains.

For the week, the

Dow Jones Industrial Average

rose 6%, the

S&P 500

gained 5.9% and the

Nasdaq Composite

climbed 6.4%. Investors' renewed ardor for stocks came at the expense of Treasury securities; despite a rally Friday, yields of the benchmark 10-year note rose 33 basis points for the week.

In a week that followed the terrorist bombing in Bali, and during which President Bush signed a war resolution, North Korea owed up to a nuclear arms program, and U.S. economic data were lackluster (save housing starts), trading was largely dictated by corporate earnings.

The earnings stream was most intense Tuesday, Wednesday and Thursday. Not coincidentally, so was market action.

On Tuesday, better-than-expected results from bellwether names such as


(C) - Get Report


Fannie Mae


Bank of America

(BAC) - Get Report

sparked a sharp rally in major proxies, completing the Dow's best four-day percentage rally since 1933 and since 1974 for the S&P.

That 1933 and 1974 were during some of the most intense bear markets in history was not lost on many observers. Skeptics grinned knowingly on Wednesday as major proxies fell precipitously following a slew of negative earnings news, starting with results posted late Tuesday by


(INTC) - Get Report


A number of other companies issued disappointing results and/or cautious guidance on Wednesday, including


(KO) - Get Report


J.P. Morgan

(JPM) - Get Report

, while Standard & Poor's downgraded

General Motors

(GM) - Get Report

and warned it may do the same to


(F) - Get Report


But just as Intel's results late Tuesday poured cold water on the bulls, so


(IBM) - Get Report

results Wednesday evening proved to be a great comeuppance to the "I told you so" crowd.

Big Blue sparked another big rally Thursday, despite a batch of economic data that included weaker-than-expected industrial production/capacity utilization data and a sharp decline in the Philadelphia Fed's regional index of manufacturing conditions. Record levels of housing starts for September were an offsetting factor, but housing has been strong for some time now. Other data suggested manufacturing may be backsliding rather than recovering.

On Friday, the Economic Cycle Research Institute reported its weekly gauge of U.S. economic activity slipped to 116.5 for the week ended Oct. 11 from 118.1 in the prior week. The index's six-month growth rate fell to negative 3.4% from negative 2.1%. Regarding the economy's ability to avoid recession, the firm issued its most downbeat assessment yet in the current cycle.

"This latest reading is pointing to slower growth ahead, but it is not forecasting a recession at this point," Lakshman Achuthan, ECRI managing director said in a statement. Still, "there is the risk of a self-fulfilling prophecy where businesses pull back because they fear a recession and the retrenchment itself triggers a period of renewed economic contraction."

The ECRI's report lent credence to the argument that the recent rally is not based on fundamentals, as discussed

here Thursday. In addition to the economic news, skepticism was rampant over the quality of earnings produced by any number of firms, notably IBM and Fannie Mae. Similarly, the stronger-than-expected results posted late Thursday by


(MSFT) - Get Report

were criticized as being the result of a new software-licensing program.

Notably, Microsoft's fourth-quarter guidance was below expectations, and results from the market-cap behemoth could only inspire 0.6% rallies in both the Dow and S&P on Friday, while the Comp gained 1.2%.

At week's end, 42% of S&P 500 companies had reported third-quarter results and the average growth in operating earnings was 6.4% on a year-over-year basis, according to Chuck Hill, director of research at First Call/Thomson Financial.

"It looks like we're doing terrific but you have to remember we're comparing to progressively worsening quarters

last year and the comparisons got easier" this year, Hill said. "Obviously, last year

earnings were on a downslope

quarter-to-quarter and this year is up, but it's very shallow."

Bottom-Picker Takes Breather

Heading into the weekend, sentiment was rising that the rally was running out of steam. Rick Bensignor, chief technical strategist at Morgan Stanley, suggested Friday that "if you bought 'em when we said to and are up over 10%, there's no harm in taking profits."

Bensignor made a well-timed "bottom" call the morning of Oct. 10 and expressed confidence here on

Wednesday that the market's lows for the years were in place.

But the S&P faces tough technical resistance in the 885 to 930 area and gains will be "much tougher going forward," the technician said Friday, with corresponding resistance ranges of 8300 to 8725 for the Dow and 1290 to 1380 for the Comp. "Because the market moved up so quickly there's a chance for a more severe pullback."

Still, he reiterated a belief that if and when that pullback occurs, it will be met by "real buying" from mutual funds who fear being "underinvested"; he indicated 814 to 842 on the S&P as the level in which such buyers will forcefully re-emerge.

Fund managers who may have missed the recent advance and fear missing the next rally is one of several factors Bensignor and others believe will keep the market elevated into early 2003. Should it persist, the skepticism about the sustainability of the rally will likely contribute to its occurrence.

But that's not to say it will be smooth sailing through year-end, as this week's action indicated.