U.S.
Stock Market
Week Ended April 21, 2011
Stocks moved
higher during the week. It began on a down note, as investors reacted to news
that Standard & Poor's had lowered its long-term outlook for U.S.
government debt from "stable" to "negative," stating that
Treasuries could be in danger of losing their AAA credit rating over the next
two years if meaningful steps to reduce budget deficits are not taken. While
stock prices headed sharply lower on the news, yields on Treasuries fell
slightly, suggesting that the rating change had not altered traders' perception
of the risk in holding U.S. debt. Indeed, investors may have sold stocks and
sought refuge in U.S. Treasuries in reaction to signs of a worsening sovereign
debt crisis in Europe: an auction of Spanish treasury bills on Monday received
a poor reception, yields on two-year Greek debt approached 20%, and the success
of a populist "euro-skeptic" political party in Finnish elections
appeared to throw a European Union bailout of Portugal into doubt. Good
earnings helped pull the U.S. market out of its doldrums as the week
progressed. Investors were particularly pleased with earnings in the technology
sector, which helped drive the Nasdaq index to its biggest daily gain in over
half a year on Wednesday. Stocks rose modestly on Thursday—the final trading day of
the holiday-shortened week—as disappointing manufacturing and unemployment data
were offset by strong earnings reports from several blue chip companies.
|
U.S. Stocks1 |
|||
|
Index2 |
Thursday's Close |
Week's Change |
% Change |
|
DJIA |
12505.99 |
121.70 |
8.02% |
|
S&P 500 |
1337.38 |
15.51 |
6.34% |
|
NASDAQ Composite |
2820.16 |
50.89 |
6.31% |
|
S&P MidCap 400 |
995.16 |
8.97 |
9.69% |
|
Russell 2000 |
845.24 |
8.99 |
7.64% |
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 4:10 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.
____________
Week Ended
April 21, 2011
Treasury
yields were little changed in a holiday-shortened week. Renewed concerns about
the European debt crisis helped fuel investor demand for the relative safe
haven of Treasuries, while an ominous warning about the credit quality of U.S.
government debt made some leery of the asset class. On Monday, ratings agency
Standard & Poor's affirmed its top AAA rating on Treasury securities but
lowered its long-term outlook to "negative" from "stable"
for the first time ever. The revised outlook increases the likelihood of a
credit rating downgrade within the next two years, a move that could increase
borrowing costs and exacerbate the government's fiscal problems. S&P noted
significant strengths in the U.S. economy but expressed concern that
policymakers may not reach agreement on an effective strategy to tackle
mounting deficits. President Obama and Congressman Paul Ryan recently released
competing long-term plans to balance the budget. Unfortunately, leading
economists have criticized the assumptions made by both plans, and political
rancor makes it unlikely that either measure will pass in its current form. In
response to the S&P announcement, the Obama administration moved to
reassure global credit markets that a downgrade is out of the question and a
deficit reduction compromise will be reached.
|
U.S. Treasury Yields1 |
||
|
Maturity |
April 21, 2011 |
April 15, 2011 |
|
2-Year |
0.66% |
0.69% |
|
10-Year |
3.40% |
3.40% |
|
30-Year |
4.47% |
4.46% |
This table is
for illustrative purposes only. Past performance cannot guarantee future
results.
1Source of data:
Bloomberg.com, as of 4 p.m. ET Thursday, April 21, 2011.
___________