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Week Ended October 28, 2011

Markets scored good gains for the week, putting the large-cap Dow Jones Industrial Average on pace for its best monthly gain in nearly a quarter of a century. The Dow and S&P 500 have now enjoyed their longest stretch of weekly gains since the start of the year. The primary driver of investor optimism appeared to be progress in resolving the European sovereign debt crisis. On Thursday, the U.S. followed overseas markets sharply higher after news emerged that European leaders had agreed to the outlines of a plan to increase the eurozone's bailout fund to $1.4 trillion, while investors would absorb a voluntary write-down of 50% on the value of their Greek bonds. Although skeptics pointed out that the details and timing of the plan had yet to be finalized, the agreement appeared to assuage growing fears that a Greek default would set off a domino chain of failures throughout the European financial system. Investors were also reassured by U.S. economic data. The Commerce Department released its advance estimate that the economy had expanded at an annualized rate of 2.5% in the third quarter, nearly double the pace of expansion in the spring. Although in line with many economists' estimates, the acceleration was conclusive evidence that the economy was weathering—at least in the short term—fallout over the European financial crisis, political gridlock over the U.S. federal debt limit, and other factors. Merger news also drove gains, and investors appeared to be generally encouraged by third-quarter earnings reports, especially from companies benefiting from high commodity prices and strong growth in emerging markets. China reported during the week that its manufacturing sector was continuing to grow at a solid rate, lessening fears that it and other emerging markets would cease pulling the global economy forward.

U.S. Stocks¹
Index²	Friday's Close	Week's Change	% Change Year-to-Date
DJIA	12231.11	422.32	5.65%
S&P 500	1285.08	46.83	2.18%
NASDAQ Composite	2737.15	99.69	3.18%
S&P MidCap 400	911.43	52.03	0.46%
Russell 2000	762.62	52.20	-2.88%

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 October 28, 2011

The U.S. economy grew at an annualized rate of 2.5% during the third quarter, its fastest pace in a year, according to the Commerce Department. The news was a welcome relief for investors following annualized growth of less than 1% in the first half of the year. That said, economic growth is likely to moderate in the final quarter of the year due to a higher savings rate and reduced spending by American consumers. Personal income was up only 0.1% at the end of the third quarter, while the savings rate is expected to increase from 3.6% in September to between 4.0% and 4.5% during the next three months, according to T. Rowe Price estimates. Despite the good economic news, consumer sentiment in October fell to its lowest level since March 2009, reflecting concerns about poor employment prospects. The housing market remains weak, another major concern for consumers. New home sales rose 5.7% in September, but the gain was attributed to a 3.1% decline in new home prices. Investors sold Treasury bonds during the week and sought out higher yields in riskier assets. As a result, Treasury yields ended the week higher overall (prices and yields move in opposite directions).

U.S. Treasury Yields¹
Maturity	October 28, 2011	October 21, 2011
2-Year	0.29%	0.27%
10-Year	2.32%	2.21%
30-Year	3.36%	3.27%

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 28, 2011.

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International Market

Week Ended October 21, 2011

International Stocks

Foreign stock markets closed higher for the week ending October 21, 2011 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 0.37%.


Region/Country	Week's Return	% Change Year-to-Date
EAFE	0.37%	-8.65%
Europe ex-U.K.	0.16%	-9.35%
Denmark	0.30%	-19.86%
France	-1.11%	-10.14%
Germany	0.34%	-10.61%
Italy	-0.50%	-12.56%
Netherlands	1.34%	-7.10%
Spain	-0.80%	-3.08%
Sweden	1.55%	-13.54%
Switzerland	1.18%	-3.42%
United Kingdom	1.38%	-2.08%
Japan	0.98%	-11.40%
AC Far East ex-Japan	-1.73%	-15.98%
Hong Kong	-3.01%	-17.93%
Korea	0.82%	-11.13%
Malaysia	-0.81%	-5.72%
Singapore	-1.62%	-14.15%
Taiwan	-1.41%	-19.23%
Thailand	-4.03%	-9.92%
EM Latin America	-1.58%	-19.69%
Brazil	-1.96%	-21.77%
Mexico	-1.65%	-14.27%
Argentina	-1.73%	-30.82%
EM (Emerging Markets)	-1.58%	-18.02%
Hungary	-1.96%	-23.10%
India	-3.70%	-26.77%
Israel	4.24%	-24.37%
Russia	0.97%	-15.82%
Turkey	-4.25%	-26.61%

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 0.92%.


Region/Country	Week's Return	% Change Year-to-Date
Developed Markets	0.92%	7.75%
Europe
Denmark	0.84%	11.37%
France	-0.47%	6.02%
Germany	0.87%	10.38%
Italy	-0.19%	-0.77%
Spain	-0.65%	7.08%
Sweden	1.19%	12.66%
United Kingdom	1.50%	13.11%
Japan	1.55%	8.37%
Emerging Markets	-0.13%	6.44%
Argentina	-2.08%	-14.64%
Brazil	-0.37%	9.58%
Bulgaria	0.03%	1.38%
Russia	0.76%	5.34%

International Currency Markets

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


Currency	Close (October 21, 2011)	Week's Return (U.S. $)	% Change Year-to-Date (U.S. $)
Japanese yen	76.130	-1.62%	-6.53%
Euro	1.3898¹	-0.23%	-3.59%
British pound	1.5949¹	-0.95%	-1.87%

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.