Week Ended April 19, 2013

Stocks lower on growth and earnings concerns

Stocks saw significant losses and high volatility after a disquieting week of disappointing economic data, earnings concerns, and renewed terrorism worries. The small-cap Russell 2000 Index, which typically sees the largest swings, fell the most and endured its biggest daily decline in 17 months. All indexes remain significantly higher year to date, however, and some observers interpreted the pullback as a predictable consolidation following the market's brisk rally of recent months.

China's growth data send commodity prices lower

Falling commodity prices and weak economic signals from Asia led to a sharp selloff to start the week, and alarm over the bombings at the Boston Marathon appeared to accelerate the selling Monday afternoon. Both the Dow Jones Industrial Average and the S&P 500 Index endured their largest single-day declines of the year. U.S. markets followed Asian markets lower as investors reacted to disappointing Chinese growth data.

Concerns over China helped drive the biggest daily decline in gold prices in the past three decades—the price of an ounce fell by 9.4% in U.S. dollar terms—and caused materials stocks to perform particularly poorly. T. Rowe Price's natural resources analysts note that while China's modest slowdown in growth could curb demand, they believe the region's growing middle class is a positive long-term driver for the industry.

Earnings reports mixed on weak top-line growth

Mixed first-quarter earnings data kept stocks volatile through the balance of the week. Some major firms beat earnings estimates, but investors remained concerned that weak top-line (revenue) growth would eventually hit profits. Declining trading and loan volumes at some large banks weighed on the financials sector.

Week ends on better note

Some reassuring economic data helped limit the week's losses. U.S. home construction reached multiyear highs in March, while industrial production data also exceeded estimates. Asian stocks rallied as commodity prices stabilized, and Japanese officials reiterated their commitment to stronger growth.

U.S. Stocks1

Index2

Friday's Close

Week's Change

% Change
Year-to-Date

DJIA

14547.51

-308.55

11.01%

S&P 500

1555.26

-33.59

9.05%

NASDAQ Composite

3206.06

-88.89

6.18%

S&P MidCap 400

1120.75

-27.86

9.83%

Russell 2000

911.38

-31.03

7.30%

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.