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 |
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.
____________
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.
___________
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 |
Week's Return |
% Change |
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.