U.S. Stock Market

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 weatheringat least in the short termfallout 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.