U.S. Stock Market

Week Ended October 14, 2011

Markets enjoyed very strong gains and moved higher for a second week as investors grew more hopeful that European leaders would stem the Continent's financial crisis. The broad S&P 500 Index scored its best weekly return in over two years, and gains were even stronger for the smaller-cap indexes and the technology-oriented Nasdaq. On Monday, markets surged on news that the leaders of France and Germany had promised to present a "comprehensive" plan by the end of the month to address the Continent's sovereign debt problems and bolster its banks. In an indication of how intertwined the world's financial system has become, however, investor sentiment wavered in the following days in reaction to reluctance on the part of some Slovakian lawmakers to approve an extension of the eurozone rescue fund. Late Thursday, the Slovakian parliament finally approved the extension, which helped fuel another rally to bookend the week. Investors also reacted enthusiastically to news that retail sales had expanded at a solid pace in September despite bleak news from Europe and continued stagnation in the U.S. labor market. Markets seemed to have a mixed reaction to the first round of quarterly earnings reports, which suggested that most corporations were continuing to boast decent—if slowing—profit growth even in the midst of the tepid economic recovery.

U.S. Stocks1

Index2

Friday's Close

Week's Change

% Change
Year-to-Date

DJIA

11644.49

541.37

0.58%

S&P 500

1224.58

69.12

-2.63%

NASDAQ Composite

2667.85

188.50

0.56%

S&P MidCap 400

854.80

55.72

-5.78%

Russell 2000

711.43

55.50

-9.40%

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 October 14, 2011

September retail sales rose 1.1% overall, and 0.6% when automotive sales are excluded, compared with increases of 0.3% and 0.5%, respectively, a month earlier. The rise was greater than expected, leading to stronger estimates for spending in the third quarter of the year. We believe core retail sales growth will come in at an annualized rate of 4.8% for the current quarter, rather than the 2.5% we had originally anticipated. However, the Thomson Reuters/University of Michigan's preliminary reading on consumer sentiment for October declined to 57.5 from 59.4. Even though the U.S. recovery is still growing, albeit slowly, the economy still faces the threat of a possible double-dip recession because of a slowdown in Europe, where sovereign debt concerns are triggering severe austerity measures. In our view, we do not think the U.S. economy is heading for another typical recession; rather, the most likely outcome is a so-called "growth recession," characterized by slow economic growth and high unemployment. Longer-term Treasury yields rose during the week, as investors sold U.S. government securities and bought bonds offering higher yields (prices and yields move counter to each other).

U.S. Treasury Yields1

Maturity

October 14, 2011

October 7, 2011

2-Year

0.26%

0.28%

10-Year

2.24%

2.06%

30-Year

3.22%

3.33%

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, October 14, 2011.

 

 

 

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International Market

Week Ended October 7, 2011

International Stocks

Foreign stock markets closed higher for the week ending October 07, 2011 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 2.01%.

 

Region/Country

Week's Return

% Change Year-to-Date

EAFE

2.01%

-12.91%

Europe ex-U.K.

2.90%

-14.98%

Denmark

-1.65%

-23.45%

France

4.12%

-14.92%

Germany

3.69%

-17.65%

Italy

5.52%

-18.71%

Netherlands

2.58%

-15.05%

Spain

3.57%

-6.25%

Sweden

2.34%

-20.16%

Switzerland

1.43%

-8.50%

United Kingdom

3.64%

-7.41%

Japan

-2.08%

-12.61%

AC Far East ex-Japan

-0.04%

-18.87%

Hong Kong

1.82%

-19.56%

Korea

-0.16%

-16.82%

Malaysia

1.68%

-8.87%

Singapore

-1.08%

-17.96%

Taiwan

-0.53%

-20.28%

Thailand

1.01%

-11.56%

EM Latin America

2.48%

-23.85%

Brazil

2.76%

-26.04%

Mexico

2.26%

-17.88%

Argentina

1.40%

-36.40%

EM (Emerging Markets)

0.42%

-21.33%

Hungary

2.80%

-30.13%

India

-1.55%

-27.87%

Israel

2.15%

-29.41%

Russia

-0.58%

-24.45%

Turkey

-3.72%

-25.93%

 

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 0.47%.

 

Region/Country

Week's Return

% Change Year-to-Date

Developed Markets

0.47%

6.66%

Europe

 

 

Denmark

-0.20%

8.77%

France

-0.38%

5.78%

Germany

-0.13%

7.64%

Italy

0.89%

-1.94%

Spain

1.01%

6.32%

Sweden

0.98%

9.90%

United Kingdom

1.08%

11.35%

Japan

0.64%

7.76%

Emerging Markets

0.74%

4.52%

Argentina

1.64%

-18.30%

Brazil

0.79%

8.59%

Bulgaria

-0.06%

0.68%

Russia

0.45%

1.91%

 

International Currency Markets

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

 

Currency

Close
(October 7, 2011)

Week's Return
(U.S. $)

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

Japanese yen

76.760

-0.42%

-5.66%

Euro

1.34921

-0.56%

-0.57%

British pound

1.56171

-0.25%

0.25%

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.