Week
Ended July 29, 2011
Stocks
endured their biggest weekly decline since last August as investors reacted to
mixed economic signals and worried about stalled negotiations in Washington to
raise the country's debt ceiling. Declines were greatest for the smaller-cap
indexes, which are typically more volatile. The deadlock in Congress appeared
to deepen as the week progressed, increasing fears that the country's debt
rating might be downgraded and that the Treasury might not be able to pay some
of its bills past August 2. As worries grew about how the debt debacle might
impact future growth, current economic data did little to ease investors'
concerns. The Commerce Department reported that both new home sales and durable
goods orders declined in June, although the latter was due to a drop in
volatile aircraft sales. More concerning, perhaps, the government also reported
that gross domestic product grew at a disappointing annualized rate of 1.3% in
the second quarter, while revising lower its estimate of first-quarter growth
to an anemic 0.4%. The week's economic news was not all bad, however. Weekly jobless
claims fell below 400,000 for the first time in three months, and home prices
showed some significant improvement in May. Investors also digested some
disappointing earnings reports during the week. A poor outlook for the third
quarter from UPS led to worries that slow growth in shipping volumes in the
U.S. and Asia might be an indicator of faltering economic activity.
|
U.S. Stocks1 |
|||
|
Index2 |
Friday's Close |
Week's Change |
% Change |
|
DJIA |
12143.24 |
-537.92 |
4.89% |
|
S&P 500 |
1292.28 |
-52.74 |
2.75% |
|
NASDAQ Composite |
2756.38 |
-102.45 |
3.90% |
|
S&P MidCap 400 |
943.42 |
-48.37 |
3.99% |
|
Russell 2000 |
796.73 |
-45.06 |
1.46% |
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 July 29, 2011
The
debate in Washington over the debt ceiling and the budget deficit went down to
the wire in the final week before the August 2 deadline, with no breakthrough
in sight. Overhanging the talks were threats by the major credit agencies to
downgrade U.S. Treasury securities in the absence of a serious resolution to
the financial crisis. The talks took place against the backdrop of slowing
economic growth, evident in the high unemployment rate, a weak housing market, and
a sluggish manufacturing sector. Employers added only a few jobs in June, while
sales of new single-family homes fell 1.0% to 312,000. The only bright note in
the housing report was that the median price of a new single-family home rose
5.8%, the largest June increase in the last 10 years. The Treasury market took
the ongoing negotiations in stride, with the yield on the 10-year note falling
to its lowest level this year. The market is likely to be tested next week if
Congress and the administration fail to resolve their differences, and the
rating agencies follow through on their threats to downgrade U.S.
sovereign debt.
|
U.S. Treasury Yields1 |
||
|
Maturity |
July 29, 2011 |
July 22, 2011 |
|
2-Year |
0.36% |
0.39% |
|
10-Year |
2.79% |
2.97% |
|
30-Year |
4.13% |
4.26% |
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 29,
2011.
___________
International Stocks
Foreign stock markets closed higher for
the week ending July 22, 2011 with the broad international measure, the MSCI
EAFE Index (Europe, Australasia, and Far East), gaining 3.37%.
|
|
||
|
Region/Country |
Week's Return |
% Change Year-to-Date |
|
EAFE |
3.37% |
5.96% |
|
Europe ex-U.K. |
4.12% |
9.21% |
|
Denmark |
2.76% |
3.08% |
|
France |
4.79% |
11.66% |
|
Germany |
3.07% |
13.41% |
|
Italy |
7.07% |
6.80% |
|
Netherlands |
5.03% |
4.04% |
|
Spain |
8.05% |
12.86% |
|
Sweden |
3.72% |
3.30% |
|
Switzerland |
1.53% |
9.79% |
|
United Kingdom |
2.79% |
7.08% |
|
Japan |
2.07% |
0.44% |
|
AC Far East ex-Japan |
2.30% |
5.07% |
|
Hong Kong |
2.50% |
-0.71% |
|
Korea |
1.55% |
12.96% |
|
Malaysia |
0.34% |
8.61% |
|
Singapore |
3.85% |
5.33% |
|
Taiwan |
3.24% |
-0.13% |
|
Thailand |
5.84% |
13.78% |
|
EM Latin America |
1.62% |
-3.64% |
|
Brazil |
2.43% |
-4.28% |
|
Mexico |
-0.22% |
-0.90% |
|
Argentina |
0.25% |
-9.72% |
|
EM (Emerging Markets) |
1.67% |
1.95% |
|
Hungary |
2.45% |
15.70% |
|
India |
1.13% |
-8.07% |
|
Israel |
-0.37% |
-6.46% |
|
Russia |
2.05% |
13.32% |
|
Turkey |
-6.62% |
-17.12% |
International Bond Markets
International bond markets in developed
countries were higher this week, with the J.P. Morgan Global Government Bond
Less U.S. Index gaining 1.41%.
|
|
||
|
Region/Country |
Week's Return |
% Change Year-to-Date |
|
Developed Markets |
1.41% |
6.29% |
|
Europe |
|
|
|
Denmark |
1.17% |
8.44% |
|
France |
1.41% |
8.42% |
|
Germany |
0.84% |
8.50% |
|
Italy |
4.00% |
5.86% |
|
Spain |
3.60% |
8.73% |
|
Sweden |
1.98% |
10.36% |
|
United Kingdom |
1.22% |
8.07% |
|
Japan |
0.88% |
4.36% |
|
Emerging Markets |
0.77% |
6.02% |
|
Argentina |
3.08% |
0.63% |
|
Brazil |
0.70% |
6.81% |
|
Bulgaria |
0.03% |
3.12% |
|
Russia |
0.47% |
5.77% |
International Currency Markets
On the currency front, the U.S. dollar
was weaker against the major currencies for the week.
|
|
|||
|
Currency |
Close |
Week's Return |
% Change |
|
Japanese yen |
78.355 |
-0.90% |
-3.51% |
|
Euro |
1.43661 |
-1.71% |
-7.08% |
|
British pound |
1.63121 |
-1.20% |
-4.18% |
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.