Week Ended April 12, 2013

Stocks reach new highs on global economic hopes

The major indexes recorded new highs throughout much of the week, as evidence suggested the U.S. and other major economies were continuing to grow. First-quarter earnings reporting season also got under way. Analysts have lowered earnings expectations considerably, although some hope that might leave room for more positive surprises as the season unwinds over the coming few weeks.

Fewer jobless claims boost sentiment

Markets moved higher through Thursday, as some positive signals suggested that the recovery remained on track and helped assuage concerns over the previous week's disappointing monthly jobs report. Investors were particularly encouraged to see a sharp drop in weekly jobless claims, which had been creeping upward over the past month.

China and Japan offer hopeful signals

Growth signals from the world's second- and third-largest economies were also positive. China reported a strong rise in imports, while hopes continued to grow that economic stimulus programs in Japan would push the economy out of its doldrums. T. Rowe Price's Tokyo-based analysts believe the new government in Japan has achieved a real turnaround for the country, and the Japanese market offers real long-term opportunities if the changes continue.

Retail sales growth disappoints and sends stocks lower to end the week

Stocks ended the week on a down note, however, as new economic data called the strength of the recovery into question once again. The Commerce Department reported that retail sales declined by 0.4% in March while lowering its growth estimates for previous months. A measure of consumer sentiment also reached its lowest level since last summer. Economists have been nervously watching spending patterns to gauge the impact of federal tax increases and spending cuts.

Earnings season begins with mixed signals

Investors also appeared to react negatively to major bank earnings released on Friday. While two major banks reported strong profits, investors were disappointed by revenue growth and loan volumes. T. Rowe Price's financial analysts note that the sector should continue to benefit from an improving U.S. economic environment and additional firming in the housing market. However, the low interest rate environment hinders banks' ability to earn money on the loans they make.

U.S. Stocks1

Index2

Friday's Close

Week's Change

% Change
Year-to-Date

DJIA

14856.06

291.04

13.37%

S&P 500

1588.85

35.58

11.41%

NASDAQ Composite

3294.95

91.09

9.12%

S&P MidCap 400

1148.61

24.53

12.56%

Russell 2000

942.41

19.47

10.96%

This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.

1Source of data Reuters, obtained through Yahoo! Finance Closing data as of 4 p.m. ET.

2The Dow Jones Industrial Average and the Standard & Poor's 500 Stock Index of blue chip stocks, the Standard & Poor's MidCap 400 Index, and the Russell 2000 Index are unmanaged indexes representing various segments by market capitalization of the U.S. equity markets. The Nasdaq Composite is an unmanaged index representing the companies traded on the Nasdaq stock market and the National Market System.