The Last Week in Review:

The recent stock market rally has been justified and most key fundamentals remain bullish, such as the economy not weakening, strong earnings growth, stable interest rates and an improved inflation outlook. However, the earnings reports beginning in earnest this week will be a key test. So far there is no evidence that weakness in the housing market is having a dramatic effect on consumer spending. This could change quickly however.

Third quarter operating earnings for the S&P 500 are expected to rise 14% or more from the same quarter last year. This is still very bullish for the stock market if it holds true. The fourth quarter is also looking good. The projections are for what would be the fifteenth straight quarter of double-digit gains. Strong earnings growth along with low and stable interest rates is a powerful formula for more stock market gains. However, earnings, inflation, valuations and the Federal Reserve actions remain the current risks on every investor's mind.

The Bulls remained in control last week, as the Dow hit another record high and the S&P 500 closed at its highest level in five years. The Dow was up 97 points increasing its year-to-date gain to 11.5%. The S&P 500 added 13 points increasing its year-to-date gain to 9.2%. The NASDAQ closed up 46 points is currently 6.4% higher on the year. The Russell 2000 rallied 17 points and is the best performing index, gaining 12.5% year-to-date.

The Week Ahead

The earnings reports begin pouring in this week with many market-movers reporting their quarterly results. Monday Charles Schwab Inc. (SCHW), Mattel (MAT), Wachovia (WB) and Crown Holdings, Inc. (CKK) all report earnings. A big day Tuesday includes announcements from American Standard (ASD), Johnson & Johnson (JNJ), Wells Fargo (WFC) and Office Depot (ODP), as well as tech companies IBM (IBM), Motorola (MOT), Intel (INTC), and Yahoo (YHOO). JP Morgan Chase (JPM), Illinois Tool (ITW), Mellon Financial (MEL), Allstate (ALL), Apple Computer (AAPL), Capitol One (COF), and eBay (EBAY) all post profits on Wednesday. On Thursday morning, announcements from Bank of America (BAC), Citigroup (C), Continental Airlines (CAL), Coca-Cola (SO), Hershey Foods (HSY), Honeywell (HON), McDonalds (MCD), Nokia (NOK), Pfizer (PFE), United Health (UNH), and UPS (UPS) will be reported. After the close, Google (GOOG) and Freescale Semiconductor (FSL) will post profits. On Friday, announcements from Caterpillar (CAT) and Schering-Plough (SGP) close out the week.

Economic news includes several market-moving reports. The September Producer Price Index (PPI) will be announced before the bell Tuesday morning, along with the September Industrial Production and Capacity Utilization. The September Core Consumer Price Index (CPI) will be announced Wednesday morning as well as the September Housing Starts and Building Permits. Thursday will include reports on the weekly unemployment claims, the September Leading Indicators and the Philadelphia Fed Index.

The BIO InvestorForum 2006 Conference, a three-day event held at the Palace Hotel in San Francisco, begins Tuesday. The Deutsche Bank Securities Fall Energy Conference in Newport, Rhode Island begins Wednesday.

In summary, investors should be focused on the corporate earnings reports and both the PPI and CPI reports this week.

Stay tuned!