Week Ended August 27, 2010
Stock prices declined
overall for the week, although small-caps managed a modest gain. Markets
declined to multi-week lows on Tuesday when the National Association of
Realtors reported that existing home sales had declined 27% in July. The
steeper-than-expected drop raised fears that a "double dip" in the
housing sector—now that homebuyer tax incentives have
ended—might drag the broader economy back
into recession as well. Investors also responded to sharp drops in overseas
markets brought about by a rise in the yen, which promised to further weaken
the export-driven Japanese economy, as well as a downgrade in Ireland's
sovereign credit rating. The bad news on the housing sector was buttressed
Wednesday when the government announced that new home construction had fallen
to its lowest level on record in July. The government also reported that
durable goods orders had declined 3.8% during the month once the volatile
transportation category was removed. Better economic news arrived Thursday when
the Labor Department reported a sharp drop in weekly jobless claims. Investors
continued to drive stock prices lower, however, perhaps in response to a report
showing a decline in manufacturing activity in the Kansas City region. Markets
regained some momentum on Friday when Federal Reserve Chairman Bernanke
announced in a speech that the central bank "will do all that it can"
to ensure the economic recovery continues. Sentiment may have also gotten a
boost from the Commerce Department's revised estimate of economic growth in the
second quarter. While the estimate was revised lower, from an annualized growth
rate of 2.4% to 1.6%, the decline was not as great as some had feared.
|
U.S. Stocks1 |
|||
|
Index2 |
Friday's Close |
Week's Change |
% Change |
|
DJIA |
10150.65 |
-62.97 |
-2.66% |
|
S&P
500 |
1064.59 |
-7.10 |
-4.53% |
|
NASDAQ
Composite |
2153.63 |
-26.13 |
-5.09% |
|
S&P
MidCap 400 |
734.30 |
-2.22 |
1.05% |
|
Russell
2000 |
617.08 |
6.41 |
-2.68% |
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 August 27, 2010
Weak economic news
continued to dominate the financial headlines. Second-quarter U.S. gross
domestic product growth was revised downward to an annualized rate of 1.6% from
2.4% previously. Sales of existing homes plunged in July by more than 27% to
the lowest level in 15 years despite historically low interest rates. It was
the biggest monthly decline on record dating back to 1968, reflecting poor
sales in all regions of the country. Roughly 10% of homeowners with mortgages
have missed at least one payment as of June 30, according to the Mortgage
Bankers Association, and officials are worried that the situation could become
even grimmer if unemployment remains near its current level. So far, progress
on job creation has been tepid at best. Federal Reserve Chairman Ben Bernanke
said the economy "remains vulnerable to unexpected developments," and
the central bank would take whatever actions are necessary if the economy deteriorates
further. Despite the discouraging economic news, Treasury yields rose on Friday
after tracking lower earlier in the week.
|
U.S. Treasury Yields1 |
||
|
Maturity |
August 27, 2010 |
August 20, 2010 |
|
2-Year |
0.56% |
0.50% |
|
10-Year |
2.65% |
2.61% |
|
30-Year |
3.70% |
3.66% |
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 27, 2010.
___________
Week Ended August 20, 2010
International
Stocks
Foreign stock markets closed lower for the week ending August
20, 2010 with the broad international measure, the MSCI EAFE Index (Europe,
Australasia, and Far East), losing -1.24%.
|
|
||
|
Region/Country |
Week's Return |
% Change Year-to-Date |
|
EAFE |
-1.24% |
-7.34% |
|
Europe ex-U.K. |
-1.93% |
-11.97% |
|
Denmark |
-4.08% |
9.10% |
|
France |
-2.71% |
-16.69% |
|
Germany |
-2.22% |
-10.91% |
|
Italy |
-3.54% |
-21.35% |
|
Netherlands |
-2.18% |
-10.98% |
|
Spain |
-2.60% |
-22.97% |
|
Sweden |
-1.20% |
6.13% |
|
Switzerland |
0.12% |
-2.50% |
|
United
Kingdom |
-1.87% |
-5.55% |
|
Japan |
0.58% |
-0.35% |
|
AC
Far East ex-Japan |
0.84% |
2.80% |
|
Hong Kong |
-1.02% |
3.74% |
|
Korea |
1.62% |
4.07% |
|
Malaysia |
3.58% |
20.39% |
|
Singapore |
-0.17% |
4.62% |
|
Taiwan |
0.22% |
-2.18% |
|
Thailand |
5.39% |
26.21% |
|
EM
Latin America |
0.84% |
-0.62% |
|
Brazil |
0.73% |
-5.35% |
|
Mexico |
0.56% |
3.39% |
|
Argentina |
3.51% |
27.98% |
|
EM
(Emerging Markets) |
0.81% |
1.72% |
|
Hungary |
-0.31% |
-13.39% |
|
India |
1.72% |
5.54% |
|
Israel |
1.39% |
-8.15% |
|
Russia |
-0.69% |
-2.32% |
|
Turkey |
0.73% |
12.07% |
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
0.7%.
|
|
||
|
Region/Country |
Week's Return |
% Change Year-to-Date |
|
Developed
Markets |
0.70% |
3.58% |
|
Europe |
|
|
|
Denmark |
0.76% |
-1.02% |
|
France |
0.48% |
-3.45% |
|
Germany |
0.47% |
-3.32% |
|
Italy |
0.22% |
-7.93% |
|
Spain |
0.45% |
-9.57% |
|
Sweden |
0.75% |
3.38% |
|
United
Kingdom |
0.79% |
4.40% |
|
Japan |
1.04% |
12.50% |
|
Emerging
Markets |
1.63% |
13.88% |
|
Argentina |
-0.43% |
17.15% |
|
Brazil |
1.32% |
13.68% |
|
Bulgaria |
0.35% |
4.83% |
|
Russia |
1.31% |
9.93% |
International
Currency Markets
On the currency front, the U.S. dollar was stronger against the
major currencies for the week.
|
|
|||
|
Currency |
Close |
Week's Return |
% Change |
|
Japanese
yen |
85.740 |
-0.71% |
-8.58% |
|
Euro |
1.26861 |
0.59% |
11.58% |
|
British
pound |
1.55081 |
0.50% |
3.97% |
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.