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 22, 2015

U.S. stocks end mixed in pre-holiday trading
U.S. large-cap stocks ended mixed this week in light trading as a lack of market-moving economic data and corporate news reassured investors that the Federal Reserve would not raise interest rates until this year's second half. Both the Dow Jones Industrial Average and broader Standard & Poor's 500 Index ended Friday off record levels touched earlier in the week. Trading was quiet ahead of the Memorial Day holiday, with daily volume well below average levels for the year.

Fed minutes indicate June liftoff unlikely
On Friday, Fed Chair Janet Yellen said the central bank is still on track to raise interest rates this year but gave little insight into timing of the first increase. Economic reports this week showed that consumer prices, excluding food and fuel, rose at a faster-than-expected 0.3% pace in April—indicating that inflation is edging closer to the Fed's 2% goal—while housing starts climbed in April from March to the highest level in seven years. Despite the solid readings, minutes from the Fed's April meeting showed that many Fed officials "thought it unlikely" that data in June would show that the U.S. economy was strong enough to raise short-term interest rates. T. Rowe Price's Chief Economist Alan Levenson believes that the Fed's initial "liftoff" will likely occur by September.

First-quarter earnings edge higher...
The wind-down of the corporate earnings season contributed to the market's muted activity. Including results from the 488 companies in the S&P 500 that have reported results as of Friday, first-quarter earnings are on track to rise 0.3% from a year ago, according to FactSet. At that pace, it will be the lowest quarterly earnings growth pace since the third quarter of 2012.

...But slowing profit growth raises valuation concern
The combination of slowing profit growth and relatively high stock prices has caused some T. Rowe Price portfolio managers to anticipate lower stock returns in the U.S. The forward 12-month price-to-earnings ratio for S&P 500 companies currently stands at 17—above the trailing 5- and 10-year averages—though analysts expect year-over-year declines in earnings and revenue to continue through this year's third quarter, according to FactSet.

On the plus side, T. Rowe Price's Asset Allocation Committee notes that U.S. corporate balance sheets and profit margins remain healthy. First-quarter earnings growth, while muted, is still better than earlier forecasts of a year-over-year decline. Looking ahead, stabilization of the U.S. dollar and energy prices could support domestic corporate earnings growth by removing these headwinds to the nation's energy, manufacturing, and export-oriented sectors.

U.S. Stocks1
Index2 Friday's Close Week's Change % Change
DJIA 18,232.02 -40.45 2.29%
S&P 500 2,126.06 3.33 3.26%
NASDAQ Composite 5,089.36 41.07 7.46%
S&P MidCap 400 1,541.94 10.89 6.16%
Russell 2000 1,252.66 8.86 3.98%
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 22, 2015

Housing starts and inflation data point to stronger U.S. growth
Stronger-than-expected April housing starts data and an April consumer price index reading that showed an uptick in inflation helped drive U.S. Treasury yields higher as investors gained confidence in the U.S. economy's rebound from a weak first quarter. (Bond prices and yields move in opposite directions.) The minutes from the Federal Reserve's late April policy meeting revealed that only "a few" participants still expect economic conditions to strengthen enough to warrant an increase in interest rates at the June meeting. T. Rowe Price Chief U.S. Economist Alan Levenson does expect rate "liftoff" by September.

ECB comments support Germany's government debt
German government bond prices gained support after a European Central Bank (ECB) official stated that the central bank will buy slightly more sovereign debt in May and June in anticipation of reduced market liquidity in the summer. The 10-year German bund traded at a yield of about 0.60% on Friday, a decrease from more than 0.75% last week. The yield on the 10-year Greek sovereign note increased to above 11% as the country's impasse with its creditors dragged on.

Early-week rush of issuance weighs on investment-grade corporate bonds
A glut of new supply early in the week—issuers sold about $40 billion of new bonds on Monday and Tuesday—weighed on the investment-grade corporate bond market before a late-week issuance slowdown in anticipation of the Memorial Day holiday. High yield bonds were broadly unchanged for the week in light trading. News reports said that European cable company Altice is pursuing an acquisition of U.S. industry peer Suddenlink in a $9 billion deal that would involve significant issuance of high yield debt.

Trading in municipal bonds focuses on problematic issuers
Municipal bonds lost ground as a result of heightened new issuance and the selling pressure on Treasuries. A large proportion of secondary market trading was in bonds from issuers that have been generating negative headlines, including Chicago, New Jersey, and Puerto Rico. Significantly underfunded pension obligations in some municipalities, including Chicago and New Jersey, have recently been drawing more concern from investors.

U.S. Treasury Yields1
Maturity May 22, 2015 May 15, 2015
2-Year 0.61% 0.54%
10-Year 2.21% 2.14%
30-Year 2.98% 2.93%

This table is for illustrative purposes only. Past performance cannot guarantee future results.

1Source of data:, as of 4 p.m. ET Friday, May 22, 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%
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
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.