U.S. Stock Market
Week Ended
April 27, 2012
Upbeat
earnings continue to outweigh mixed economic data and Europe
concerns
Stocks moved higher as good earnings
reports prevailed over investors' persistent worries about the European debt
crisis, as well as some data suggesting a slowdown in the U.S. economic
recovery. Markets started the week on a down note in reaction to a steep drop
in European stocks, apparently prompted by the dissolution of the Dutch
government over the weekend in response to dissatisfaction with austerity
measures. Investors also seemed concerned about the strong showing of French
socialist candidate François Hollande in the first
round of the country's presidential voting. Some worry that Hollande will not cooperate with German Chancellor Angela
Merkel in pushing through fiscal consolidation in the eurozone.
U.S. stocks regained their footing as
the week progressed, thanks in large part to first-quarter earnings that have
generally exceeded analysts' expectations-roughly three-fourths of the S&P
500 companies that have reported so far have topped estimates, according to
Thomson Reuters. Strong showings in the technology sector provided a particular
boost to the Nasdaq
Composite Index.
The economic backdrop for corporate
profits was mixed, however. Weekly jobless claims remained somewhat elevated
for the second week in a row, suggesting that the sharp drop in claims earlier
in the year may be ending. On Friday, the government announced that the U.S. economy
had grown at an annual rate of 2.2% in the first quarter of 2012 versus 3.0% in
the fourth quarter of 2011. The headline number masked stronger underlying
data, however, according to our economists. "Core" growth measures,
such as consumer spending and housing construction, enjoyed solid growth, while
government spending fell sharply. Continued job and income growth remain
critical for a self-sustained recovery, particularly given the headwind of
fiscal policy uncertainty beyond 2012.
|
U.S. Stocks1
|
|
Index2
|
Friday's Close
|
Week's Change
|
% Change
Year-to-Date
|
|
DJIA
|
13228.31
|
199.05
|
8.27%
|
|
S&P 500
|
1403.36
|
24.83
|
11.59%
|
|
NASDAQ Composite
|
3069.20
|
68.75
|
17.81%
|
|
S&P MidCap 400
|
999.56
|
22.45
|
13.66%
|
|
Russell 2000
|
825.57
|
21.23
|
11.45%
|
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.
___________
U.S. Bond Market
Week Ended April 27, 2012
Political
turmoil in Europe sustains Treasuries
Treasury yields were little changed
from last week as worries about Europe's debt crisis offset strong earnings in
the U.S.,
sustaining demand for safe-haven debt. The 10-year yielda benchmark for U.S. consumer
and corporate borrowingstayed below 2%, reflecting fresh worries about the eurozone and the global outlook.
Political turmoil in Europe
fueled investor angst. First-round voting last weekend in France's presidential election resulted in a
victory for Socialist candidate Francois Hollande,
and many polls predict he will become France's next president. A victory
by Hollande, who has criticized European policy in Greece for
being too severe, has led to worries that his government will back away from
austerity. On Thursday, Standard & Poor's downgraded Spain's sovereign credit rating due to its
deteriorating fiscal position, raising fears that Spain will be
the next European country to seek a bailout.
Meanwhile, U.S. economic data continued to
point to a frustratingly slow recovery. On Friday, the government reported that
gross domestic product (GDP) grew 2.2% in the first quarter of 2012, down from the 3.0% pace in last year's final quarter
and below many economists' forecasts. The GDP report came days after the
Federal Reserve's latest policy meeting, during which the central bank said it
would keep short-term interest rates near zero until 2014. Fed officials also
upgraded their forecasts for the jobs market and economic growth from their
last outlook in January.
Bonds
benefit from strong earnings
Major fixed income sectors were on
track to rise for the week, particularly the riskier sectors. As of Thursday's market close, high yield bonds performed well,
boosted by strong earnings reports from some key issuers. The recovery
in high yield bonds over the past three years has raised concerns about their
potential for continued strong performance. We believe that fundamentals
supporting the high yield market are strong, and they remain an important area
of focus for our diversified fixed income portfolios. Local and
dollar-denominated emerging markets debt outpaced slim gains made by
Treasuries. Treasury inflation protected securities also advanced.
|
U.S. Treasury Yields1
|
|
Maturity
|
April 27, 2012
|
April 20, 2012
|
|
2-Year
|
0.26%
|
0.27%
|
|
10-Year
|
1.93%
|
1.96%
|
|
30-Year
|
3.12%
|
3.12%
|
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 27, 2012.
___________
International Market
Week Ended
April 20, 2012
International
Stocks
Foreign stock markets closed higher for
the week ending April 20, 2012 with the broad international measure, the MSCI
EAFE Index (Europe, Australasia, and Far East),
gaining 1.68%.
|
|
|
Region/Country
|
Week's Return
|
% Change Year-to-Date
|
|
EAFE
|
1.68%
|
8.24%
|
|
Europe ex-U.K.
|
2.43%
|
7.64%
|
|
Denmark
|
3.65%
|
23.33%
|
|
France
|
0.99%
|
4.22%
|
|
Germany
|
3.41%
|
16.91%
|
|
Italy
|
1.47%
|
-2.18%
|
|
Netherlands
|
3.09%
|
4.35%
|
|
Spain
|
-1.62%
|
-14.77%
|
|
Sweden
|
3.99%
|
12.30%
|
|
Switzerland
|
3.82%
|
10.38%
|
|
United Kingdom
|
3.67%
|
8.69%
|
|
Japan
|
-1.33%
|
6.52%
|
|
AC Far East ex-Japan
|
-0.70%
|
12.65%
|
|
Hong Kong
|
1.05%
|
14.47%
|
|
Korea
|
-2.33%
|
13.04%
|
|
Malaysia
|
-1.29%
|
7.68%
|
|
Singapore
|
0.46%
|
18.84%
|
|
Taiwan
|
-3.57%
|
8.64%
|
|
Thailand
|
2.75%
|
21.79%
|
|
EM Latin America
|
-0.33%
|
10.60%
|
|
Brazil
|
-1.16%
|
8.30%
|
|
Mexico
|
0.99%
|
12.58%
|
|
Argentina
|
-17.67%
|
-33.32%
|
|
EM (Emerging Markets)
|
-0.43%
|
12.20%
|
|
Hungary
|
2.73%
|
13.33%
|
|
India
|
0.05%
|
16.68%
|
|
Israel
|
1.53%
|
10.13%
|
|
Russia
|
-0.01%
|
16.88%
|
|
Turkey
|
-1.28%
|
21.96%
|
International Bond
Markets
International bond markets in developed
countries were lower this week, with the J.P. Morgan Global Government Bond
Less U.S.
Index losing -0.04%.
|
|
|
Region/Country
|
Week's Return
|
% Change Year-to-Date
|
|
Developed Markets
|
-0.04%
|
-0.74%
|
|
Europe
|
|
|
|
Denmark
|
0.87%
|
0.62%
|
|
France
|
0.31%
|
2.38%
|
|
Germany
|
0.93%
|
2.84%
|
|
Italy
|
0.62%
|
10.60%
|
|
Spain
|
1.14%
|
0.03%
|
|
Sweden
|
1.18%
|
1.65%
|
|
United Kingdom
|
0.37%
|
1.81%
|
|
Japan
|
-0.74%
|
-5.19%
|
|
Emerging Markets
|
0.75%
|
5.34%
|
|
Argentina
|
-3.30%
|
-2.61%
|
|
Brazil
|
0.73%
|
3.68%
|
|
Bulgaria
|
0.14%
|
3.36%
|
|
Russia
|
0.54%
|
5.08%
|
International Currency
Markets
On the currency front, the U.S. dollar
was weaker against the major currencies for the week.
|
|
|
Currency
|
Close
(April 20, 2012)
|
Week's Return
(U.S.
$)
|
% Change
Year-to-Date (U.S. $)
|
|
Japanese yen
|
81.605
|
0.77%
|
5.72%
|
|
Euro
|
1.32081
|
-0.96%
|
-1.74%
|
|
British pound
|
1.61171
|
-1.46%
|
-3.70%
|
1U.S. dollars per national currency
unit.
Sources: Foreign stock markets and
currency sections are from Rimes Technologies, using MSCI data. International
bond markets are from J.P. Morgan.
Note: All returns are in U.S. dollars.
All bond indices are J.P. Morgan. All stock indices are Morgan Stanley Capital
International (MSCI).
|
Equity Indices
|
|
EAFE:
|
MSCI Europe,
Australasia, and Far East Index
|
|
Europe Ex-U.K.:
|
MSCI Europe
ex-U.K. Index
|
|
Far East Ex-Japan:
|
MSCI AC Far East
ex-Japan Index
|
|
Latin America:
|
MSCI Emerging Markets Latin America Index
|
|
Emerging Markets:
|
MSCI Emerging
Markets Index
|
|
Bond Indices
|
|
Developed Markets:
|
J.P. Morgan Global
Government Bond Less U.S.
Index
|
|
Emerging Markets:
|
J.P. Morgan Emerging
Markets Bond Index Plus
|
All charts are for illustrative purposes only and do not represent the
performance of any specific security. Past performance cannot guarantee
future results.