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Week Ended August 19, 2011

Stocks endured another week of substantial declines as initial optimism about earnings and hopes for progress in resolving the European debt crisis gave way to growing worries that the U.S. economy might slip back into recession. The major indexes rose sharply on Monday and built on their gains late in the previous week as speculation increased that European leaders would announce stronger steps to resolve the continent's banking and sovereign debt problems. Investors were also encouraged by the announcement of major takeovers in the banking, media, and technology sectors, which indicated that corporations remained optimistic about future profits and viewed the recent market tumble as a buying opportunity. Enthusiasm about Europe evaporated on Tuesday, however, when the leaders of France and Germany indicated their opposition to the creation of euro zone bonds, a form of collective action that many had hoped might rescue weaker economies in the region. A larger blow to the markets came Thursday, when stocks plunged following data showing that manufacturing activity in the Mid-Atlantic region had fallen to its lowest level since the depth of the recession in early 2009. Investors were also unnerved by a report in the Wall Street Journal that U.S. regulators were concerned about the health of the U.S. branches of European banks. A decline in existing home sales in July also weighed on sentiment. Continuing economic worries and a poorly received outlook and corporate reorganization announcement by a major technology firm sent the markets further lower to end the week.

U.S. Stocks¹
Index²	Friday's Close	Week's Change	% Change Year-to-Date
DJIA	10817.65	-451.37	-6.56%
S&P 500	1123.53	-55.28	-10.66%
NASDAQ Composite	2341.84	-166.14	-11.72%
S&P MidCap 400	787.86	-55.22	-13.16%
Russell 2000	651.61	-45.29	-17.02%

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 August 192, 2011

Longer-dated U.S. Treasury prices rose as investors sought refuge amid fears that global growth is weakening, Europe's debt crisis is worsening, and the U.S. could fall into another recession. Yields on 5-, 7-, and 10-year notes all fell to historic lows during the week as investors scooped up Treasuries as a safe haven, despite uncertainty about how the U.S. plans to resolve its deficit and spur growth. Economic and political uncertainty has buoyed the Treasury market in recent weeks as investors sought safety amid severe market volatility following Standard & Poor's decision on August 5 to downgrade the nation's long-term credit rating. In the U.S., investors are worried that the modest economic recovery is stalling; in Europe, investors fretted that the sovereign debt crisis would claim Italy and Spain, both of which are grappling with high debt and weak growth. In economic news, the Labor Department on Thursday reported that consumer prices rose in July, although core inflation—which strips out food and energy prices—was modest. Separately, the Labor Department reported that initial jobless claims rose by 9,000 to 408,000 in the week ended August 13, the highest in a month. One particularly downbeat report came from the Federal Reserve Bank of Philadelphia, which said that manufacturing in the Philadelphia region unexpectedly contracted in August by the most in more than two years. The Philadelphia fed report, which some fear may be a harbinger of a recession in the U.S., caused Treasury yields to touch new lows on Thursday.

U.S. Treasury Yields¹
Maturity	August 19, 2011	August 12, 2011
2-Year	0.19%	0.18%
10-Year	2.07%	2.24%
30-Year	3.39%	3.71%

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, August 19, 2011.

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International Market

Week Ended August 12, 2011

International Stocks

Foreign stock markets closed lower for the week ending August 12, 2011 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), losing -0.92%.


Region/Country	Week's Return	% Change Year-to-Date
EAFE	-0.92%	-7.35%
Europe ex-U.K.	-0.93%	-7.09%
Denmark	-0.50%	-13.03%
France	-1.47%	-7.08%
Germany	-3.22%	-7.99%
Italy	-0.65%	-13.26%
Netherlands	-1.83%	-9.66%
Spain	-0.13%	-3.53%
Sweden	0.79%	-12.02%
Switzerland	0.07%	0.76%
United Kingdom	0.85%	-3.65%
Japan	-2.38%	-9.80%
AC Far East ex-Japan	-5.42%	-9.03%
Hong Kong	-4.11%	-9.83%
Korea	-9.53%	-10.25%
Malaysia	-2.61%	1.72%
Singapore	-4.29%	-5.52%
Taiwan	-2.23%	-12.46%
Thailand	-3.33%	4.50%
EM Latin America	-1.34%	-15.73%
Brazil	-1.62%	-17.71%
Mexico	-3.12%	-11.52%
Argentina	-3.63%	-21.52%
EM (Emerging Markets)	-4.82%	-12.27%
Hungary	-8.77%	-9.40%
India	-4.20%	-19.44%
Israel	-7.59%	-24.38%
Russia	-10.24%	-8.81%
Turkey	-9.66%	-30.90%

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 1.71%.


Region/Country	Week's Return	% Change Year-to-Date
Developed Markets	1.71%	8.25%
Europe
Denmark	0.26%	10.82%
France	0.86%	10.17%
Germany	0.30%	10.72%
Italy	5.09%	6.01%
Spain	5.19%	11.38%
Sweden	1.07%	12.04%
United Kingdom	-0.32%	11.27%
Japan	1.84%	6.76%
Emerging Markets	-1.31%	6.00%
Argentina	-0.20%	-4.18%
Brazil	-0.92%	8.25%
Bulgaria	0.25%	2.75%
Russia	-0.70%	5.84%

International Currency Markets

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


Currency	Close (August 12, 2011)	Week's Return (U.S. $)	% Change Year-to-Date (U.S. $)
Japanese yen	76.770	-2.24%	-5.65%
Euro	1.4216¹	-0.16%	-5.96%
British pound	1.6275¹	0.67%	-3.95%

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.