Weekly Recap - Week ending 09-Oct-09U.S. equity markets rebounded this week, rising for five consecutive sessions to close sharply higher.  The S&P gained 4.5%.

Nine of the ten sectors that make up the index advanced, led by Energy (+7.5%), Financials (+6.7%) and Materials (+6.6%).  The Financial sector was stronger from the get go as Goldman Sachs on Monday morning upgraded the U.S. Large-Cap Bank industry to Attractive from Neutral, helping the Bank Index (BKX) rally 3.2%.  It had seen a 6% slide over the prior two weeks.

Telecom was the only sector in the red (-2.5%), due to weakness in the integrated telcos after AT&T (T) announced Tuesday after the close that it would allow third-party applications to run packet-based voice calls on its 3G network.  This decision is expected to further commoditize voice services on mobile networks, and could eventually lead AT&T and peer Verizon (VZ) toward offering and promoting unlimited use plans as Sprint (S) currently offers.

While there was no important data this week to gauge the economic recovery, the Reserve Bank of Australia's decision on Tuesday to raise its key lending rate 25 basis points to 3.25% was interpreted as another confirmation that the global recovery is continuing.  The S&P gained 1.4% that day.  However, Australia seems to be the exception, as the Bank of England, European Central Bank and Bank of Korea all kept their benchmark rates steady this week, though economists expect the latter to begin raising them as soon as next month.

We'll have a few more pieces of economic data to break down next week, including Retail Sales and FOMC Minutes on Wednesday, CPI on Thursday and Industrial Production on Friday.

But the big story this week was the third quarter earnings reporting season.  While it doesn't really get going until the middle of next week, Alcoa (AA) unofficially kicked things off Wednesday after the close with better-than-expected results.  It reported an unexpected profit, not solely due to cost cutting but also to modestly better-than-expected sales, which is unlike the trend witnessed in the prior quarter, while management predicted global aluminum demand will improve in the second half of 2009.

Admittedly we're uncertain as to how the market will react to the third quarter reports.  There should be a greater demand for top-line driven earnings growth, yet with easy comparisons coming in the fourth quarter, it is not hard to see how the market could grant corporate America another pass.

We'll get a clearer picture next week, when the likes of Johnson & Johnson (JNJ), Intel (INTC), JP Morgan Chase (JPM), Citigroup (C), Goldman Sachs (GS), Nokia (NOK), Google (GOOG), IBM (IBM), Bank of America (BAC) and General Electric (GE) all provide results.

Finally, the Treasury calendar was a focal point for investors once again this week, as $78 billion in longer-term securities (3-year Notes, 10-year Notes and TIPS, 30-year Bonds) were auctioned off.  While the results were positive, they did not appear to have much effect on equity markets.

Index	Started Week	Ended Week	Change	% Change	YTD %
DJIA	9487.67	9864.94	377.27	4.0	12.4
Nasdaq	2048.11	2139.28	91.17	4.5	35.7
S&P 500	1025.21	1071.49	46.28	4.5	18.6
Russell 2000	580.20	614.92	34.72	6.0	23.1