Stocks ended sharply lower
for the week. Investors remained focused on the European debt crisis and its
potential to weigh on U.S. exports and corporate profits. Share prices fell substantially
on Tuesday, apparently in reaction to a new German ban on a type of speculative
stock sale. Some worried that the unilateral move signaled that a wave of
financial regulation lay ahead. On Thursday, stocks fell sharply again, causing
the major indexes to fall into correction territory—widely
considered to be a decline of 10% or more from recent highs. Disappointing
economic data in the U.S. appeared to compound continued worries about Europe.
The government reported an unexpected and sharp rise in weekly jobless claims,
a gauge of regional manufacturing activity rose less than anticipated, and the
Conference Board’s index of leading economic indicators
declined in April for the first time in over a year. Stock prices rebounded
somewhat late in the day on Friday. Financials rose sharply on the heels of the
Senate’s passage of financial reform
legislation. Investors may have also taken encouragement from the German
parliament’s approval of the country’s
contribution to the European Union and International Monetary Fund aid plan for
Greece.
|
U.S.
Stocks1 |
|||
|
Index2 |
Friday’s Close |
Week’s Change |
% Change |
|
DJIA |
10193.39 |
-426.77 |
-2.25% |
|
S&P
500 |
1087.69 |
-47.99 |
-2.46% |
|
NASDAQ
Composite |
2229.04 |
-117.81 |
-1.77% |
|
S&P
MidCap 400 |
749.97 |
-39.34 |
3.20% |
|
Russell
2000 |
648.96 |
-44.74 |
2.35% |
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 May 21, 2010
The economic news released
during the week prompted investors to reassess just how vigorous the economic
rebound actually is. With an expanding economy, the Federal Reserve usually
anticipates a pickup in inflation and plans to take steps to counter the onset
of rising prices. Instead, consumer prices fell in April for the first time in
13 months, taking analysts by surprise. The drop was primarily due to receding
oil prices, yet even after excluding volatile energy and food costs, core
inflation is up only 0.9% during the past 12 months, the smallest rise since
1966. The Fed issued a statement saying that inflation is below its “comfort
zone” of 1% to 2% a year. As a result, the
central bank is unlikely to start raising short-term rates until clear signs
emerge that core inflation is accelerating well up into the Fed’s
comfort zone. Some Fed members also expressed concerns that the crisis
emanating from Greece could “slow the recovery in this country.”
Another dose of unwelcome news also rattled the financial markets: The number
of homeowners who missed at least one mortgage payment surged to an all-time
high in the first quarter of the year, indicating that the housing crisis may
not be over. Taken together, the data suggest that continuing economic growth
throughout the remainder of the year could be more tepid than analysts have
been forecasting. Longer-term Treasury yields tumbled as investors rushed into
the relative safety of U.S. government-backed securities (bond prices and yields
move in opposite directions).
|
U.S.
Treasury Yields1 |
||
|
Maturity |
May 21, 2010 |
May 14, 2010 |
|
2-Year |
0.74% |
0.78% |
|
10-Year |
3.20% |
3.45% |
|
30-Year |
4.07% |
4.32% |
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 21, 2010.
____________________________
Week Ended May 14, 2010
International
Stocks
Foreign stock markets closed higher for the week ending May 14,
2010 with the broad international measure, the MSCI EAFE Index (Europe,
Australasia, and Far East), gaining 2.02%.
|
|
||
|
Region/Country |
Week’s Return |
% Change Year-to-Date |
|
EAFE |
2.02% |
-8.87% |
|
Europe ex-U.K. |
3.48% |
-15.24% |
|
Denmark |
6.79% |
8.26% |
|
France |
3.47% |
-19.01% |
|
Germany |
4.14% |
-11.81% |
|
Italy |
3.01% |
-25.83% |
|
Netherlands |
4.39% |
-10.83% |
|
Spain |
2.45% |
-32.13% |
|
Sweden |
4.79% |
-0.46% |
|
Switzerland |
2.24% |
-7.40% |
|
United
Kingdom |
1.82% |
-11.09% |
|
Japan |
-0.75% |
4.59% |
|
AC
Far East ex-Japan |
2.75% |
-1.42% |
|
Hong Kong |
0.45% |
-4.12% |
|
Korea |
5.02% |
4.55% |
|
Malaysia |
3.09% |
12.70% |
|
Singapore |
2.54% |
-0.30% |
|
Taiwan |
2.54% |
-5.53% |
|
Thailand |
-1.09% |
10.47% |
|
EM
Latin America |
4.11% |
-6.29% |
|
Brazil |
3.78% |
-9.98% |
|
Mexico |
5.01% |
2.46% |
|
Argentina |
3.68% |
-1.93% |
|
EM
(Emerging Markets) |
3.66% |
-2.19% |
|
Hungary |
8.91% |
-5.47% |
|
India |
2.54% |
1.26% |
|
Israel |
-0.80% |
-0.06% |
|
Russia |
6.93% |
-2.27% |
|
Turkey |
8.48% |
2.62% |
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
-0.87%.
|
|
||
|
Region/Country |
Week’s Return |
% Change Year-to-Date |
|
Developed
Markets |
-0.87% |
-4.27% |
|
Europe |
|
|
|
Denmark |
-2.55% |
-8.44% |
|
France |
-1.79% |
-9.32% |
|
Germany |
-2.07% |
-8.95% |
|
Italy |
0.72% |
-11.73% |
|
Spain |
1.18% |
-12.69% |
|
Sweden |
-0.03% |
-2.87% |
|
United
Kingdom |
-0.60% |
-7.20% |
|
Japan |
-1.16% |
1.86% |
|
Emerging
Markets |
2.41% |
3.91% |
|
Argentina |
5.69% |
1.96% |
|
Brazil |
2.24% |
3.96% |
|
Bulgaria |
0.57% |
0.24% |
|
Russia |
2.45% |
2.93% |
International
Currency Markets
On the currency front, the U.S. dollar was stronger against the
major currencies for the week.
|
|
|||
|
Currency |
Close |
Week’s Return |
% Change |
|
Japanese
yen |
92.000 |
1.06% |
-1.19% |
|
Euro |
1.24251 |
1.78% |
13.40% |
|
British
pound |
1.45561 |
0.88% |
9.86% |
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.