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Week Ended July 16, 2010

After a good start, stocks ended the week lower. Large-cap stocks fared better than small- and mid-cap shares while the technology-heavy Nasdaq Composite Index posted a smaller loss. Investors bid shares sharply higher on Tuesday in response to good corporate earnings news, particularly from Alcoa. The aluminum giant is often considered a bellwether for the global economy. Financial stocks were in the spotlight in the final two days of the week. The long-debated financial reform bill was approved by Congress and awaits President Obama's signature, global finance officials gathered in Switzerland to craft stricter regulations for international banks, Goldman Sachs agreed to pay a $550 million penalty to settle SEC charges related to the firm's sale of mortgage securities, and some of the largest U.S. banks reported higher earnings but disappointed Wall Street analysts with their revenue numbers. Stocks fell sharply on the final day of trading amid the disappointing revenue totals and a report showing that American consumer confidence declined more than economists anticipated.

U.S. Stocks¹
Index²	Friday's Close	Week's Change	% Change Year-to-Date
DJIA	10097.90	-99.82	-3.17%
S&P 500	1064.87	-13.06	-4.50%
NASDAQ Composite	2179.05	-17.40	-3.97%
S&P MidCap 400	726.96	-12.93	0.04%
Russell 2000	612.41	-16.23	-3.42%

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.

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U.S. Bond Market

Week Ended July 16, 2010

The week brought more bad news on the retail front, with sales down 0.5% in June (-0.1% excluding autos). May sales were off -1.1% and -1.2%, respectively. The weak sales suggest that consumer spending in the second quarter was sluggish and economic growth could be slower than anticipated in the months ahead. We expect a slower increase in consumer spending, from 2.5% to 2.75% in the first half of the year to between 1.5% and 2.0% over the second half. Income gains have been limited by weakness in the labor market, along with a rising savings rate that constrains spending growth. At their last meeting in June, Federal Reserve officials lowered their forecasts for growth this year and stated that they might have to adopt new measures to keep the recovery alive. Core inflation has been steady in recent months at 1.00% to 1.25% a year, but looking ahead, it appears to be headed below 1%. Treasury yields slipped for all maturities during the week, closing below their levels of the week before.

U.S. Treasury Yields¹
Maturity	July 16, 2010	July 9, 2010
2-Year	0.58%	0.62%
10-Year	2.93%	3.06%
30-Year	3.95%	4.04%

This table is for illustrative purposes only. Past performance cannot guarantee future results.

¹Source of data: Bloomberg.com, as of 4 p.m. ET Friday, July 16, 2010.

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International Market

Week Ended July 9, 2010

International Stocks

Foreign stock markets closed higher for the week ending July 09, 2010 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 5.03%.


Region/Country	Week's Return	% Change Year-to-Date
EAFE	5.03%	-8.59%
Europe ex-U.K.	5.73%	-12.06%
Denmark	4.03%	10.51%
France	6.18%	-16.42%
Germany	4.21%	-10.32%
Italy	7.41%	-19.98%
Netherlands	5.09%	-8.94%
Spain	10.43%	-23.22%
Sweden	5.93%	6.38%
Switzerland	4.71%	-4.27%
United Kingdom	5.55%	-9.67%
Japan	2.93%	-0.21%
AC Far East ex-Japan	4.41%	-1.41%
Hong Kong	2.70%	-1.41%
Korea	6.54%	-0.02%
Malaysia	2.28%	11.72%
Singapore	2.75%	2.03%
Taiwan	6.79%	-7.43%
Thailand	2.05%	13.50%
EM Latin America	4.21%	-4.86%
Brazil	4.32%	-9.08%
Mexico	3.93%	1.55%
Argentina	8.26%	7.32%
EM (Emerging Markets)	4.35%	-2.42%
Hungary	9.60%	-11.16%
India	2.10%	2.37%
Israel	3.56%	-8.12%
Russia	3.62%	-6.90%
Turkey	3.35%	6.13%

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 -0.42%.


Region/Country	Week's Return	% Change Year-to-Date
Developed Markets	-0.42%	-0.46%
Europe
Denmark	0.02%	-4.31%
France	0.58%	-6.37%
Germany	0.00%	-5.98%
Italy	0.48%	-10.55%
Spain	0.52%	-13.64%
Sweden	1.27%	0.35%
United Kingdom	-0.44%	-0.59%
Japan	-1.38%	7.19%
Emerging Markets	1.14%	6.28%
Argentina	6.22%	3.91%
Brazil	0.75%	6.59%
Bulgaria	1.41%	1.76%
Russia	0.92%	3.63%

International Currency Markets

On the currency front, the U.S. dollar was stronger against the major currencies for the week.


Currency	Close (July 9, 2010)	Week's Return (U.S. $)	% Change Year-to-Date (U.S. $)
Japanese yen	88.485	0.89%	-5.21%
Euro	1.2634¹	-0.25%	11.95%
British pound	1.511¹	0.52%	6.43%

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.