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 May 15, 2015

S&P 500 reaches new closing high
The major benchmarks drifted lower for much of the week but ended modestly higher thanks to a strong and broad rally on Thursday. The large-cap Standard & Poor's 500 Index managed to establish an all-time closing high at the end of the week. The technology-heavy Nasdaq Composite performed best, however, lifted at midweek by semiconductor, software, and Internet shares. Smaller-cap stocks also outperformed for the  week.

European bond sell-off raises central bank fears
With first-quarter earnings reporting season nearing an end, traders' focus at the start of the week appeared to be on the sell-off in the European bond market. Yields on German bonds (bunds) bounced off historical lows, and some investors appeared to worry that the renormalizing of interest rates was an early signal of a less accommodative monetary environment for equities. China's monetary policy appeared headed on the opposite track, with the country's central bank announcing over the weekend another cut in interest rates to spur growth. U.S. and other global markets initially rose on the news but quickly lost  momentum.

Retail sales disappoint, but longer-term trend intact
The week's domestic economic data were relatively sparse, but the data did not appear to suggest an imminent change in U.S. monetary policy. The Commerce Department reported that retail sales were flat in April, dashing investors' hopes that better weather might bring out more shoppers. T. Rowe Price U.S. Chief Economist Alan Levenson takes a somewhat different view, noting that the two-month pattern of core retail sales (less food and energy) growth has exceeded earnings gains and helped unwind part of the January and February shortfall. He expects a moderate acceleration in personal consumption expenditures in the current  quarter.

Jobless claims reach 15-year low
Mr. Levenson notes that the tightening labor market is finally resulting in real wage gains, and the bright spot for the week was a drop in the four-week average of weekly jobless claims to its lowest level in 15 years. Further evidence of consumer caution arrived on Friday, however, when the University of Michigan and Reuters reported a surprisingly sharp decline in their gauge of consumer sentiment. Industrial production data also came in weaker than  expected.

Thursday rally appears to be a bounceback
Thursday's rally wiped out losses earlier in the week, but T. Rowe Price traders note that it occurred on thin volumes, like many such rallies this year. A bounceback from recent losses may deserve much of the credit, they observe, especially given a relative lack of surprising economic or earnings  news.

U.S. Stocks1
Index2 Friday's Close Week's Change % Change
Year-to-Date
DJIA 18,272.56 81.45 2.52%
S&P 500 2122.73 6.64 3.10%
NASDAQ Composite 5048.29 44.74 6.59%
S&P MidCap 400 1531.05 11.18 5.41%
Russell 2000 1243.77 7.50 3.24%
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 May 15, 2015

Treasury yields volatile amid mixed U.S. economic data
U.S. Treasury debt prices lost ground early in the week before recovering on Friday as yields on higher-quality sovereign debt globally continued to increase. (Bond prices and yields move in opposite directions.) Economic data from the U.S. were mixed, with the number of weekly jobless claims unexpectedly declining while core retail sales edged up only 0.1% in April from March. Also on the negative side, the April producer price index showed costs continuing to fall.

German sovereign bond yields continue to increase
The volatility in German government bonds, which are the benchmark for high-quality, non–U.S. sovereign debt, continued. The yield on the 10–year "bund" reached 0.76% during the week before trading around 0.66% on Friday as the selling pressure moderated. Yields on Greek government bonds remain elevated as the country's impasse with its international creditors drags on. T. Rowe Price's sovereign debt analysts expect even more volatility in Greek government debt that could affect other peripheral eurozone sovereign bonds, but they still think that Greece will eventually reach an agreement with the creditors and stay in the eurozone.

Moody's downgrades Chicago to junk
Municipal bonds declined as a result of elevated new issuance levels and the selling pressure in Treasuries. On Wednesday, Moody's Investors Service cut its credit rating on Chicago's general obligation debt to below investment grade, adding to the strain on the city's finances. The move from Moody's followed a decision by the Illinois Supreme Court striking down a law that would have permitted cuts to the retirement benefits of public  workers.

Market digests new supply of corporate bonds
Despite an active new issue calendar and the increase in Treasury yields, investment-grade corporate bonds held up relatively well. Credit spreads, which measure the additional yield above that of a comparable-maturity Treasury security that investors demand for holding a bond with credit risk, were little changed. The high yield bond market also digested considerable new supply to finish the week  flat.

U.S. Treasury Yields1
Maturity May 15, 2015 May 8, 2015
2-Year 0.54% 0.57%
10-Year 2.14% 2.15%
30-Year 2.93% 2.90%

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 15, 2015.

Week Ended May 15, 2015

International Stocks

Foreign stock markets closed higher for the week ending May 15, 2015 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 1.47%.

 
Region/Country Week's Return % Change Year-to-Date
EAFE 1.47% 11.61%
Europe ex-U.K. 1.11% 11.95%
Denmark 1.15% 24.67%
France 0.90% 12.38%
Germany -0.10% 10.45%
Italy 2.81% 15.69%
Netherlands 2.73% 13.38%
Spain 1.26% 4.94%
Sweden -0.02% 8.72%
Switzerland 1.66% 13.03%
United Kingdom 1.31% 9.01%
Japan 1.53% 15.51%
AC Far East ex-Japan 0.67% 12.29%
Hong Kong 1.51% 16.50%
Korea 0.21% 7.57%
Malaysia 1.26% 1.79%
Singapore 0.98% 4.24%
Taiwan 0.08% 7.45%
Thailand -0.06% 1.15%
EM Latin America 0.79% 2.73%
Brazil 0.63% 2.51%
Mexico 1.40% 3.10%
Argentina 1.15% 22.69%
EM (Emerging Markets) 0.85% 9.79%
Hungary -0.90% 36.56%
India 1.80% 0.67%
Israel 1.81% 8.84%
Russia 1.79% 45.11%
Turkey 9.04% -6.52%

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 gaining 1.09%.

 
Region/Country Week's Return % Change Year-to-Date
Developed Markets 1.09% -2.16%
Europe    
Denmark -0.17% -6.15%
France 1.25% -4.95%
Germany 1.19% -5.30%
Italy 1.39% -3.68%
Spain 1.44% -5.13%
Sweden 0.01% -3.80%
United Kingdom 1.92% 1.62%
Japan 0.57% -0.17%
Emerging Markets -0.30% 9.65%
Argentina -1.21% 31.83%
Brazil -0.85% 9.13%
Russia 0.80% 6.58%

International Currency Markets

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

 
Currency Close
(05/15/2015)
Week's Return
(U.S. $)
% Change
Year-to-Date (U.S. $)
Japanese yen 119.300 -0.39% -0.50%
Euro 1.14411 -1.98% 5.45%
British pound 1.57921 -2.39% -1.28%

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.