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Week Ended September 2, 2011

Stocks recorded modest losses after good gains early in the week evaporated on Thursday and Friday. News of a large merger in the troubled Greek banking system, coupled with relief that Hurricane Irene did not cause as much damage as feared, helped boost sentiment on Monday. Investors were also encouraged by data showing a healthy rise in consumer spending in July, which reversed a June pullback and helped ease fears that the economy was slipping back into a "double-dip" recession. Data released later in the week also proved reassuring. The monthly tally of private sector job gains by payroll processing firm ADP showed a decent if not robust rise in August. Another survey showed a drop in planned job cuts, and weekly jobless claims declined for the first time in a month. Investors were also relieved to see that the Institute for Supply Management's gauge of manufacturing activity indicated continued expansion in the sector, if just barely. A plunge in a regional gauge of manufacturing activity in mid-August had raised fears that factory production was contracting sharply. Optimism faded Thursday afternoon, however, as investors braced themselves for the release of the Labor Department's jobs report the following morning—caution that unfortunately proved warranted. The report showed that nonfarm payroll employment remained unchanged in August (the first such occurrence since World War II), job gains in the two previous months were not as strong as previously estimated, and the unemployment rate remained stuck at 9.1%. It was the worst monthly showing in nearly a year, but some economists noted that private payroll gains were held back by the Verizon Communications strike, which temporarily sidelined 45,000 workers.

U.S. Stocks¹
Index²	Friday's Close	Week's Change	% Change Year-to-Date
DJIA	11240.26	-44.28	-2.91%
S&P 500	1173.97	-2.83	-6.65%
NASDAQ Composite	2480.33	0.48	-6.50%
S&P MidCap 400	832.99	-2.93	-8.19%
Russell 2000	684.86	-6.11	-12.79%

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 September 2, 2011

Investors were disappointed by the jobs report on Friday, the last day of trading before the Labor Day Weekend. Unemployment remained high at 9.1% as private industry added only 17,000 new jobs to the payrolls. The economic news was mixed earlier in the week, with Standard & Poor's/Case-Shiller Home Price Index showing that home prices rose for the third straight month in most U.S. cities. In 19 of the 20 cities measured, prices advanced 3.6% in the second quarter from the first three months of the year. The news was tempered, however, by data showing that home prices declined in all 20 cities during the past 12 months after adjusting for seasonal factors. Weak home sales and sluggish job growth have been two major drags on U.S. economic growth two years after the recession officially ended. Tepid growth, dwindling home equity, and high unemployment resulted in the Conference Board's consumer confidence index falling in August to its lowest level in more than two years. Low confidence has restrained consumer demand, which accounts for about 70% of total U.S. economic activity. The Treasury market was volatile during the week, with long-term yields finishing below their levels of a week earlier.

U.S. Treasury Yields¹
Maturity	September 2, 2011	August 26, 2011
2-Year	0.20%	0.19%
10-Year	2.02%	2.19%
30-Year	3.33%	3.53%

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

¹Source of data: Bloomberg.com, as of 2 p.m. ET Friday, September 2, 2011.

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International Market

Week Ended August 26, 2011

International Stocks

Foreign stock markets closed higher for the week ending August 26, 2011 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 0.69%.


Region/Country	Week's Return	% Change Year-to-Date
EAFE	0.69%	-9.90%
Europe ex-U.K.	1.11%	-10.98%
Denmark	-4.01%	-20.12%
France	1.97%	-9.77%
Germany	0.73%	-14.22%
Italy	0.98%	-18.13%
Netherlands	0.02%	-13.39%
Spain	-0.03%	-7.59%
Sweden	3.09%	-15.34%
Switzerland	1.45%	-2.70%
United Kingdom	-0.32%	-7.19%
Japan	-0.27%	-11.46%
AC Far East ex-Japan	1.08%	-10.28%
Hong Kong	1.33%	-9.61%
Korea	3.95%	-10.85%
Malaysia	-3.28%	-0.78%
Singapore	0.45%	-8.28%
Taiwan	2.05%	-14.17%
Thailand	-3.36%	1.83%
EM Latin America	0.65%	-15.71%
Brazil	0.53%	-17.85%
Mexico	0.54%	-10.99%
Argentina	1.71%	-23.85%
EM (Emerging Markets)	0.64%	-13.42%
Hungary	0.68%	-9.30%
India	-3.00%	-26.02%
Israel	0.16%	-24.85%
Russia	1.49%	-8.67%
Turkey	2.91%	-27.51%

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 -1.06%.


Region/Country	Week's Return	% Change Year-to-Date
Developed Markets	-1.06%	9.17%
Europe
Denmark	-0.53%	13.44%
France	-0.77%	12.35%
Germany	-0.56%	13.18%
Italy	-1.05%	7.49%
Spain	-0.60%	12.79%
Sweden	-0.14%	15.30%
United Kingdom	-2.54%	12.20%
Japan	-1.10%	6.77%
Emerging Markets	-0.57%	7.03%
Argentina	-1.42%	-6.19%
Brazil	-0.42%	9.90%
Bulgaria	-0.20%	3.24%
Russia	-0.59%	6.46%

International Currency Markets

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


Currency	Close (August 26, 2011)	Week's Return (U.S. $)	% Change Year-to-Date (U.S. $)
Japanese yen	76.855	0.79%	-5.53%
Euro	1.436¹	0.41%	-7.04%
British pound	1.6226¹	2.08%	-3.64%

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.