T. Rowe Price Investment Services, Inc.

Week Ended January 8, 2010

Stock prices rose in the first week of the new year. Investors bid shares sharply higher on Monday in response to news of rising industrial production in the United States, Europe, and China. Materials and energy shares were particularly robust. Continuing favorable economic news help stocks rise modestly through the middle of the week. The Commerce Department reported a solid rise in factory orders, and data from the Institute for Supply Management showed a surprisingly strong pickup in service sector activity. The end of the week brought discouraging news in the form of a Labor Department report, which showed that payrolls declined by 85,000 in December. The decline was larger than most expected and reversed a slight gain in payrolls (the first since the recession began) in November. Investors appeared undeterred by the data, however, appearing to focusing instead on the possibility that the Fed may continue to keep interest rates low for a longer period in order to encourage job growth.

U.S. Stocks1

Index2

Friday’s Close

Week’s Change

% Change
Year-to-Date

DJIA

10618.19

190.14

1.82%

S&P 500

1114.98

29.88

2.68%

NASDAQ Composite

2317.17

48.02

2.12%

S&P MidCap 400

752.08

25.40

3.50%

Russell 2000

643.79

9.72

1.53%

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 January 8, 2010

Stock prices rose in the first week of the new year. Investors bid shares sharply higher on Monday in response to news of rising industrial production in the United States, Europe, and China. Materials and energy shares were particularly robust. Continuing favorable economic news help stocks rise modestly through the middle of the week. The Commerce Department reported a solid rise in factory orders, and data from the Institute for Supply Management showed a surprisingly strong pickup in service sector activity. The end of the week brought discouraging news in the form of a Labor Department report, which showed that payrolls declined by 85,000 in December. The decline was larger than most expected and reversed a slight gain in payrolls (the first since the recession began) in November. Investors appeared undeterred by the data, however, appearing to focusing instead on the possibility that the Fed may continue to keep interest rates low for a longer period in order to encourage job growth.

U.S. Stocks1

Index2

Friday’s Close

Week’s Change

% Change
Year-to-Date

DJIA

10618.19

190.14

1.82%

S&P 500

1114.98

29.88

2.68%

NASDAQ Composite

2317.17

48.02

2.12%

S&P MidCap 400

752.08

25.40

3.50%

Russell 2000

643.79

9.72

1.53%

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 January 8, 2010

The year got off to a shaky start with a report that another 85,000 jobs were lost in December, more than most analysts had anticipated. The unemployment rate remained unchanged at 10%, but that reflects a large number of job seekers leaving the labor force. That said, the pace of job losses has been slowing in recent months, although economists don’t expect the employment picture to improve significantly in the foreseeable future. The economy has lost 7.2 million jobs since the recession began at the end of 2007, and it is going to be difficult to recover them all before the onset of another recession, according to some observers. The Federal Reserve is unlikely to tighten monetary policy until signs of a sustained recovery become more evident. Treasury yields were mixed on the news, with the two-year yield declining and the 30-year yield rising from its level at the end of 2009.

U.S. Treasury Yields1

Maturity

January 8, 2010

December 31, 2009

2-Year

0.96%

1.14%

10-Year

3.81%

3.83%

30-Year

4.70%

4.63%

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, January 8, 2010.

 

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International Stocks

Foreign stock markets closed higher for the week ending December 31, 2009 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 0.42%.

 

Region/Country

Week’s Return

% Change Year-to-Date

EAFE

0.42%

32.46%

Europe ex-U.K.

0.29%

33.94%

Denmark

0.27%

37.09%

France

0.55%

33.26%

Germany

0.00%

26.56%

Italy

0.53%

28.00%

Netherlands

0.23%

43.04%

Spain

-0.15%

45.07%

Sweden

1.18%

65.89%

Switzerland

-0.02%

26.61%

United Kingdom

1.55%

43.37%

Japan

-1.97%

6.39%

AC Far East ex-Japan

2.06%

69.39%

Hong Kong

1.84%

60.15%

Korea

1.14%

72.06%

Malaysia

0.82%

52.06%

Singapore

2.44%

74.00%

Taiwan

3.47%

80.25%

Thailand

1.37%

77.31%

EM Latin America

1.64%

104.19%

Brazil

2.72%

128.62%

Mexico

-1.63%

56.63%

Argentina

2.27%

64.00%

EM (Emerging Markets)

1.62%

79.02%

Hungary

3.29%

77.61%

India

0.51%

102.81%

Israel

-0.14%

54.58%

Russia

-0.91%

104.91%

Turkey

4.12%

98.49%

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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 -0.68%.

 

Region/Country

Week’s Return

% Change Year-to-Date

Developed Markets

-0.68%

3.94%

Europe

 

 

Denmark

-0.46%

5.00%

France

-0.56%

6.25%

Germany

-0.55%

5.12%

Italy

-0.61%

11.81%

Spain

-0.31%

6.96%

Sweden

1.92%

9.78%

United Kingdom

1.58%

11.22%

Japan

-1.41%

-1.75%

Emerging Markets

0.18%

25.95%

Argentina

0.15%

132.78%

Brazil

0.11%

11.04%

Bulgaria

-0.71%

28.19%

Russia

0.00%

37.11%

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International Currency Markets

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

 

Currency

Close
(December 31, 2009)

Week’s Return
(U.S. $)

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

Japanese yen

93.095

1.42%

2.63%

Euro

1.43481

0.07%

-3.22%

British pound

1.61491

-1.37%

-12.32%

1U.S. dollars per national currency unit.