U.S. Stock Market

Week Ended August 26, 2011

Stocks recorded their first weekly gain in a month, boosted by bargain hunting and anticipation of further stimulus on the part of the Federal Reserve. On Tuesday, markets rallied sharply as news of weak new home sales and a drop in a regional manufacturing gauge—rather than weighing on sentiment—appeared to drive speculation that Fed Chairman Ben Bernanke would announce new measures to boost growth at a central bank conference in Jackson Hole, WY on Friday. Investors treated better economic news on Wednesday—in the form of a substantial rise in durable goods orders—as a further buying signal. While the increase was due in large part to a rise in volatile aircraft orders, it also reflected a rebound in auto manufacturing following disruptions caused by March's earthquake and tsunami in Japan. Concerns that Bernanke's upcoming speech would fall short of expectations caused stocks to fall back again on Thursday. Worries that Germany might follow other European markets and ban short-selling also weighed on sentiment. The release of Bernanke's much-anticipated speech on Friday morning initially resulted in a sharp drop in stock prices, as it failed to include any specific promises for further stimulus. Investors appeared to reconsider the speech, however, as speculation grew that a special two-day policy meeting Bernanke announced for September would result in new measures to boost lending and economic growth. Stocks reversed course mid-morning and ended the week with healthy gains.

U.S. Stocks1

Index2

Friday's Close

Week's Change

% Change
Year-to-Date

DJIA

11284.54

466.89

-2.53%

S&P 500

1176.80

53.27

-6.43%

NASDAQ Composite

2479.85

138.01

-6.52%

S&P MidCap 400

835.92

48.06

-7.86%

Russell 2000

690.97

39.36

-12.01%

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.

 

 

 

 ____________

U.S. Bond Market

Week Ended August 26, 2011

The U.S. economy grew at a sluggish annualized rate of 1.0% in the second quarter of the year, according to the Commerce Department. The economy has grown only 0.7% through the first half of 2011, reflecting fewer exports, low consumer demand, and weak growth in business inventories. Economists noted that nine of the past 11 recessions have been preceded by periods of economic growth amounting to 1.0% or less, prompting fears of a double-dip recession in some quarters. Not surprising, consumer confidence fell in August in the wake of the extended debate in Washington over raising the debt ceiling and the lackluster agreement to rein in the federal budget deficit. Federal Reserve Chairman Ben Bernanke stated on Friday that monetary policymakers will consider taking further steps to stimulate the faltering economy. He did warn, however, that "most of the economic policies that support robust economic growth in the long run are outside the province of the central bank," and that much of the responsibility for action rests with the legislative and executive branches of government. Despite the disappointing economic news, longer-term Treasury yields rose during the week, while the two-year yield was unchanged.

U.S. Treasury Yields1

Maturity

August 26, 2011

August 19, 2011

2-Year

0.19%

0.19%

10-Year

2.19%

2.07%

30-Year

3.53%

3.39%

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 26, 2011.

 

 

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International Market

Week Ended August 19, 2011

International Stocks

Foreign stock markets closed lower for the week ending August 19, 2011 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), losing -3.42%.

 

Region/Country

Week's Return

% Change Year-to-Date

EAFE

-3.42%

-10.52%

Europe ex-U.K.

-5.24%

-11.96%

Denmark

-4.31%

-16.78%

France

-4.77%

-11.51%

Germany

-7.44%

-14.84%

Italy

-6.53%

-18.93%

Netherlands

-4.16%

-13.41%

Spain

-4.17%

-7.56%

Sweden

-6.66%

-17.88%

Switzerland

-4.81%

-4.09%

United Kingdom

-3.36%

-6.89%

Japan

-1.58%

-11.22%

AC Far East ex-Japan

-2.42%

-11.24%

Hong Kong

-1.07%

-10.80%

Korea

-4.45%

-14.24%

Malaysia

0.85%

2.59%

Singapore

-3.35%

-8.68%

Taiwan

-3.93%

-15.89%

Thailand

0.83%

5.37%

EM Latin America

-0.62%

-16.25%

Brazil

-0.70%

-18.28%

Mexico

0.05%

-11.47%

Argentina

-4.59%

-25.12%

EM (Emerging Markets)

-1.93%

-13.97%

Hungary

-0.57%

-9.92%

India

-5.33%

-23.74%

Israel

-0.78%

-24.97%

Russia

-1.31%

-10.01%

Turkey

1.95%

-29.56%

 

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 1.94%.

 

Region/Country

Week's Return

% Change Year-to-Date

Developed Markets

1.94%

10.35%

Europe

 

 

Denmark

2.91%

14.04%

France

2.77%

13.22%

Germany

2.79%

13.81%

Italy

2.48%

8.63%

Spain

1.88%

13.47%

Sweden

3.05%

15.46%

United Kingdom

3.46%

15.12%

Japan

1.11%

7.95%

Emerging Markets

1.55%

7.64%

Argentina

-0.69%

-4.84%

Brazil

1.95%

10.36%

Bulgaria

0.68%

3.45%

Russia

1.19%

7.10%

 

International Currency Markets

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

 

Currency

Close
(August 19, 2011)

Week's Return
(U.S. $)

% Change
Year-to-Date (U.S. $)

Japanese yen

76.245

-0.69%

-6.37%

Euro

1.44191

-1.43%

-7.48%

British pound

1.65721

-1.82%

-5.84%

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.