Select corporate earnings and some firm economic data out of Europe sent equity markets higher this week. Excellent results from Morgan Stanley, Caterpillar, UPS, Apple, Ford and others stoked risk appetite, aided by Germany's excellent July IFO reading and the UK's strong Q2 GDP reading. Commodities rose with risk appetite as both crude and copper rose to two month highs (note that gold keeps heading lower).  Fed Chairman Bernanke's Congressional testimony on Wednesday tripped up investors as they latched onto his description of the economic environment as "unusually uncertain." Focus shifted increasingly to the EU's bank stress tests as the week wore on. The initial results released on Friday seemed to be even more favorable than some of the rosier forecasts, with only seven institutions in the "fail" column, with most analysts forecasting 10 or more would fail. Official test parameters confirmed that the test were limited to trading book losses rather than all bonds held to maturity, prompting dismissive commentary from certain analysts. For the week, the S&P500 gained 3.5%, the DJIA rose 3.2% and the Nasdaq Composite added 4.2%.

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