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  • Review current performance analyses and weekly statistics for stock and bond markets in the U.S. and abroad, including regional and broad-based international indexes and principal currency exchange rates.

    Week Ended September 19, 2014

    Stocks return to record highs

    The major indexes were mixed for the week. The large—cap indexes regained the previous week's losses and set record highs by early Friday. The Nasdaq Composite lagged, back by its heavy allocation in technology—software giant Oracle fell following the resignation of its founder and CEO—and biotechnology. Smaller-cap shares suffered losses for the week, due largely to a sell—off on Monday.

    Investors relieved that Fed signals no policy changes

    The week's large—cap gains partly reflected a relief rally, as investors were encouraged that Federal Reserve policymakers made no substantive changes to their policy stance following their scheduled meeting on Wednesday. While some had anticipated that recent economic strength would encourage Fed officials to warn of an eventual increase in short-term interest rates, the Fed's post—meeting policy statement repeated that officials intended to leave rates near 0% "for a considerable time."

    Inflation remains very low

    Room for patience on the Fed's part also seemed to be revealed in inflation data released during the week. The Labor Department reported that consumer prices had declined by 0.2% in August, due largely to a sharp drop in energy prices. However, T. Rowe Price chief economist Alan Levenson believes that the recent moderation in inflation is unlikely to change the timing of the Fed's first rate hike.

    Investors welcome "no" vote on Scottish independence

    Investors appeared pleased that Scottish voters decided not to break with the United Kingdom, as earlier polls had suggested was likely. As polling later in the week shifted back to the likelihood of "no" vote, the British pound recovered some of its losses against the U.S. dollar. Recent dollar advances have raised concerns that U.S. goods might become less competitive on world markets. Commodity prices have also declined in dollar terms, weighing on energy and materials stocks.

    Alibaba IPO sets new record

    The week's other major market event was the initial public offering by Chinese e—commerce giant Alibaba. The IPO garnered $21.8 billion, the largest amount ever raised on U.S. markets, and subsequent trading pushed the value of the company among the largest U.S.—traded firms in terms of market capitalization.

    A rise in risk aversion?

    Several sources during the week noted that the market's overall advance masked somewhat of a turn away from riskier assets. Risk aversion has been evidenced in part by the poor relative performance of the small-cap Russell 2000 Index, which is typically more volatile than large-caps. In addition, Bloomberg reported on Monday that nearly half of the stocks in the Nasdaq Composite were individually in "bear market" territory-that is, down more than 20% from their peaks in the last 12 months.

    U.S. Stocks1
    Index2 Friday's Close Week's Change % Change
    Year-to-Date
    DJIA 17279.74 292.23 4.24%
    S&P 500 2010.40 24.86 8.77%
    NASDAQ Composite 4579.79 12.19 9.65%
    S&P MidCap 400 1420.30 -1.93 5.79%
    Russell 2000 1147.49 -13.45 -1.39%
    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 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 September 19, 2014

    Fed keeps "considerable time" language on rate hikes

    After its policy meeting on Wednesday, the Federal Reserve provided guidance about the timing of interest rate hikes that was little changed. The Fed reaffirmed its plans to keep rates low for a "considerable time" following the end of its asset purchase program. Two— to five—year Treasuries, which would experience the largest negative price effects from an increase in the federal funds rate, sold off after the Fed statement as their yields reached the highest levels since 2011. However, longer-term Treasuries, which are more responsive to changes in inflation expectations, showed little reaction.

    Monthly CPI declines

    The Bureau of Labor Statistics released consumer price index (CPI) data showing that prices declined 0.2% in August from July as a drop in energy prices (particularly gasoline) more than outweighed a modest rise in food costs. The data marked the first monthly decline in the CPI since April 2013. Core CPI, which excludes the volatile food and energy segments, was unchanged in August.

    UK government debt mixed after Scotland votes to stay

    Outside the U.S., UK government bonds, known as gilts, were mixed following Scotland's vote on Thursday to remain part of the UK. Yields on longer—maturity gilts fell as a result of the reduced political uncertainty, while short-term gilt yields moved higher as investor focus returned to the Bank of England's impending move to tighten monetary policy. In emerging markets, Venezuela's sovereign debt sold off after Standard & Poor's downgraded its credit rating to CCC+ from B-.

    Attractive relative value in small new high yield deals

    High yield corporate bonds finished the week close to unchanged. Secondary—market high yield trading was light prior to the Fed's Wednesday statement, while deals with relatively small dollar amounts dominated the week's new issuance. T. Rowe Price's high yield analysts and portfolio managers found some attractive relative value in the small new deals-several were attractively priced as a result of the uncertainty before the Fed's policy announcement.

    U.S. Treasury Yields1
    Maturity September 19, 2014 September 12, 2014
    2-Year 0.56% 0.56%
    10-Year 2.58% 2.61%
    30-Year 3.29% 3.35%

    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, September 19, 2014.

    Week Ended September 12, 2014

    International Stocks

    Foreign stock markets closed lower for the week ending September 12, 2014 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), losing -1.27%.

     
    Region/Country Week's Return % Change Year-to-Date
    EAFE -1.27% 1.73%
    Europe ex-U.K. -0.99% 1.05%
    Denmark 3.21% 18.03%
    France -1.09% -0.15%
    Germany -1.11% -5.43%
    Italy -1.53% 7.58%
    Netherlands -0.54% -1.52%
    Spain -2.63% 7.00%
    Sweden -0.58% -3.03%
    Switzerland -0.49% 4.86%
    United Kingdom -1.30% 1.68%
    Japan -0.57% -0.98%
    AC Far East ex-Japan -1.85% 8.70%
    Hong Kong -1.69% 9.66%
    Korea -1.21% 1.25%
    Malaysia -1.12% 2.65%
    Singapore -0.71% 6.65%
    Taiwan -2.36% 13.49%
    Thailand -1.06% 25.02%
    EM Latin America -6.72% 8.91%
    Brazil -9.41% 11.87%
    Mexico -2.44% 6.72%
    Argentina 4.77% 29.49%
    EM (Emerging Markets) -3.15% 8.39%
    Hungary 0.39% -11.56%
    India -0.47% 28.49%
    Israel -1.43% 18.05%
    Russia -3.39% -13.18%
    Turkey -7.79% 14.39%
    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 -1.78%.

     
    Region/Country Week's Return % Change Year-to-Date
    Developed Markets -1.78% 1.59%
    Europe    
    Denmark -0.82% 0.80%
    France -1.09% 1.41%
    Germany -0.69% 0.05%
    Italy -1.25% 4.94%
    Spain -1.82% 5.50%
    Sweden -1.58% -3.08%
    United Kingdom -1.25% 4.18%
    Japan -2.55% -0.40%
    Emerging Markets -1.31% 8.33%
    Argentina 2.84% 16.95%
    Brazil -2.20% 8.44%
    Russia -0.82% 0.16%
    International Currency Markets

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

     
    Currency Close
    (September 12, 2014)
    Week's Return
    (U.S. $)
    % Change
    Year-to-Date (U.S. $)
    Japanese yen 107.365 2.31% 2.10%
    Euro 1.29381 0.16% 6.11%
    British pound 1.62291 0.56% 2.01%
    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.
    Copyright 2014, T. Rowe Price Investment Services, Inc., Distributor. All rights reserved.