U

Week Ended May 14, 2010

Stocks rebounded to begin the week but ended on a down note. Small-cap shares saw strong gains and handily outpaced larger issues. On Monday, investors celebrated news over the weekend that European officials had negotiated a massive loan package designed to head off the continent’s sovereign debt crisis. Optimism that debt problems would remain contained to Greece spurred the Dow to rise by over 400 points, its largest gain in over a year. Stocks added to their gains at midweek as Spain announced an austerity plan to address its own fiscal problems. Investors also reacted positively to news on the U.S. economy. The Commerce Department reported that U.S. exports had expanded in March, even as the overall trade deficit widened. A favorable outlook issued by technology and services giant IBM also boosted sentiment. Stock prices reversed course Thursday afternoon, however, apparently in response to reports of new investigations in the banking sector and weak reports from some retailers. Friday brought good news on overall retail sales over the past few months but also renewed concerns over the situation in Europe. Investors appeared to be particularly concerned about a drop in core inflation in Spain, which cast doubt on the country’s ability to grow its way from under its debt burden..

U.S. Stocks¹
Index²	Friday’s Close	Week’s Change	% Change Year-to-Date
DJIA	10620.16	240.56	1.84%
S&P 500	1135.68	24.81	1.85%
NASDAQ Composite	2346.85	81.21	3.42%
S&P MidCap 400	789.31	32.67	8.62%
Russell 2000	693.70	39.44	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 May 14, 2010

Retail sales rose again in April for the seventh month in a row, although the gain was more moderate than it had been in recent months. Consumer spending accounts for about 70% of U.S. economic activity, so analysts monitor the data closely to get a fix on future growth. Sales had been especially robust in February and March, so April’s weaker advance does not necessarily cast doubt on the economic recovery currently under way. The longer-term trend toward rising demand reflected in stronger retail sales remains intact. Indeed, the major worry that emerged during the week was that Europe’s recovery might be at least partly derailed by the problems emanating from Greece. Treasuries were mixed, with the two-year yield falling over the week and longer-term yields inching up a few notches.

U.S. Treasury Yields¹
Maturity	May 14, 2010	May 7, 2010
2-Year	0.78%	0.81%
10-Year	3.45%	3.41%
30-Year	4.32%	4.27%

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, May 14, 2010.

____________________________

Week Ended May 7, 2010

International Stocks

Foreign stock markets closed lower for the week ending May 07, 2010 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), losing -9.95%.


Region/Country	Week’s Return	% Change Year-to-Date
EAFE	-9.95%	-10.67%
Europe ex-U.K.	-13.37%	-18.10%
Denmark	-12.88%	1.38%
France	-14.22%	-21.72%
Germany	-11.53%	-15.32%
Italy	-16.61%	-28.00%
Netherlands	-13.41%	-14.58%
Spain	-17.94%	-33.75%
Sweden	-16.31%	-5.01%
Switzerland	-8.95%	-9.43%
United Kingdom	-11.16%	-12.67%
Japan	-2.50%	5.38%
AC Far East ex-Japan	-6.85%	-4.06%
Hong Kong	-4.51%	-4.56%
Korea	-9.42%	-0.45%
Malaysia	-3.91%	9.32%
Singapore	-6.91%	-2.77%
Taiwan	-6.58%	-7.87%
Thailand	1.16%	11.68%
EM Latin America	-11.17%	-9.99%
Brazil	-12.40%	-13.26%
Mexico	-9.65%	-2.42%
Argentina	-10.67%	-5.42%
EM (Emerging Markets)	-9.02%	-5.64%
Hungary	-23.20%	-13.21%
India	-7.55%	-1.24%
Israel	-1.39%	0.74%
Russia	-13.80%	-8.60%
Turkey	-15.39%	-5.40%

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 -1.21%.


Region/Country	Week’s Return	% Change Year-to-Date
Developed Markets	-1.21%	-3.44%
Europe
Denmark	-3.56%	-6.04%
France	-3.97%	-7.66%
Germany	-3.56%	-7.03%
Italy	-6.92%	-12.35%
Spain	-7.51%	-13.71%
Sweden	-4.75%	-2.85%
United Kingdom	-3.29%	-6.64%
Japan	3.31%	3.05%
Emerging Markets	-2.72%	1.47%
Argentina	-8.47%	-3.53%
Brazil	-1.52%	1.68%
Bulgaria	-3.21%	-0.33%
Russia	-3.16%	0.47%

International Currency Markets

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


Currency	Close (May 7, 2010)	Week’s Return (U.S. $)	% Change Year-to-Date (U.S. $)
Japanese yen	91.025	-3.28%	-2.27%
Euro	1.2651¹	4.86%	11.83%
British pound	1.4684¹	4.07%	9.07%

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.