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 April 17, 2015

Stocks fall on overseas worries
A sharp decline driven largely by events overseas on Friday left U.S. stocks lower for the week, but not before the large-cap benchmarks climbed near their all-time highs at midweek. The small-cap Russell 2000 Index, which is typically more insulated from overseas markets, fared somewhat better and managed to establish a record close on Wednesday before falling back. Volumes increased somewhat as traders reacted to both the developments abroad and the first full week of significant first-quarter earnings reports.

Early earnings reports not as bad as feared
Some positive—at least, better than expected—earnings reports appeared to push markets higher early in the week. As always, results were not uniform, but a pattern seemed to be emerging that profits had not declined quite as much as feared. By Friday, analytics and data firm FactSet was calculating that earnings in the S&P 500 had declined by 4.1% in the quarter—the first quarterly drop since late 2012 but somewhat better than earlier estimates.

Oil stocks rise on belated evidence of supply response
The plunge in energy sector profits was a primary culprit in the earnings dip, but better news on this front helped drive energy stocks higher and may have bolstered overall sentiment. Energy stocks and oil prices surged on Tuesday and Wednesday, supported by news of a decline in North Dakota oil production. While producers have cut back on unproductive drilling operations, U.S. supply had continued to grow stubbornly, and traders were encouraged to finally see evidence of a market response to last year's dramatic decline in crude prices.

Greece exit worries send global markets lower to end week
The strong U.S. dollar has also weighed on U.S. multinationals' profits, perhaps making sentiment particularly sensitive to global growth and financial concerns. Bad news on this front derailed the markets on Friday as global markets reacted to new Chinese trading regulations, and as speculation grew that Greece would be unable to make scheduled payments on its bailout loan. The news heightened speculation that Greece might default on its debt and abandon the shared European currency.

"Grexit" may already be partially reflected in stock prices
T. Rowe Price equity and sovereign credit analysts in Europe acknowledge that the potential for Greece to leave the eurozone has increased, although it is far from clear that such an event will occur. If Greece does exit, it is likely to increase volatility in markets, but the possibility of such an event has been telegraphed for some time now and is unlikely to catch investors by surprise.

European economy and firms generally on more solid footing
T. Rowe Price's London-based equity team notes that Europe's economic recovery appears to have gained momentum in recent months. European companies have continued to meaningfully restructure, reduce costs, and improve their market positions, and our analysts believe that many companies will experience significant operating leverage as the gradual recovery in Europe continues. In addition, a weaker euro versus the dollar is likely to lift eurozone exports.

U.S. Stocks1
Index2 Friday's Close Week's Change % Change
Year-to-Date
DJIA 17,826.30 -231.35 0.02%
S&P 500 2081.18 -20.88 1.08%
NASDAQ Composite 4931.81 -64.17 4.13%
S&P MidCap 400 1515.92 -18.66 4.37%
Russell 2000 1252.47 -11.93 3.97%
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 April 17, 2015

Soft U.S. economic data help extend rally in Treasuries
U.S. Treasuries extended their recent rally as weaker-than-expected economic data added to the uncertainty about when the Federal Reserve will start to tighten monetary policy. Retail sales in March increased for the first time since November but were still lower than expected. March housing starts numbers also disappointed. On the positive side for the U.S. economy, the consumer price index edged 0.2% higher in March, which should boost the Fed's confidence that the economy will be able to avoid a prolonged period of very low inflation.

German government debt yields decline to record lows
After the European Central Bank's policy meeting on Wednesday, President Mario Draghi stressed that the central bank's quantitative easing (QE) program is helping the eurozone economy and that the bank expects to continue buying bonds through at least September 2016. The QE program has boosted the prices of German sovereign debt, with the yield on the 10-year German "bund" decreasing to a record low of 0.05% on Friday. Concerns about Greece's ability to meet its debt obligations helped fuel the rally in higher-quality eurozone sovereigns. (Bond prices and yields move in opposite directions.)

Corporate debt gains on oil price increase and light issuance
High yield bonds generated solid returns as the price of oil climbed. Bonds from oil-related issuers account for a large proportion of most high yield indexes. Investment-grade corporate debt also had a positive week as the volume of new issuance was much lighter after a record-setting first quarter, likely because earnings season is now in full swing. In particular, several large bellwether banks reported earnings this week that were largely positive for their credit quality.

Positive week for emerging markets bonds
Emerging markets debt broadly gained, although Turkey's bonds experienced selling pressure as the political uncertainty in that country increased in advance of its general elections in June. China reported that its gross domestic product expanded at a 7.0% annual rate in the first quarter, the slowest pace of growth since the beginning of 2009. Petrobras, Brazil's huge state-owned oil company, announced that it will hold a Board meeting next week, raising hopes that it will file revised financial statements and avoid a technical default.

U.S. Treasury Yields1
Maturity April 17, 2015 April 10, 2015
2-Year 0.50% 0.56%
10-Year 1.86% 1.95%
30-Year 2.51% 2.58%

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, April 17, 2015.

Week Ended April 10, 2015

International Stocks

Foreign stock markets closed lower for the week ending April 10, 2015 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 1.57%.

 
Region/Country Week's Return % Change Year-to-Date
EAFE 1.57% 8.04%
Europe ex-U.K. 0.83% 8.47%
Denmark 1.51% 21.54%
France 0.89% 7.92%
Germany 1.00% 10.96%
Italy -0.15% 8.79%
Netherlands 0.87% 8.35%
Spain -1.75% 0.16%
Sweden -0.08% 6.16%
Switzerland 1.63% 8.42%
United Kingdom 2.57% 2.47%
Japan 1.20% 13.32%
AC Far East ex-Japan 4.86% 11.49%
Hong Kong 7.37% 14.89%
Korea 2.54% 7.99%
Malaysia 0.70% 0.10%
Singapore 0.30% -0.28%
Taiwan 0.48% 4.90%
Thailand 1.49% 5.99%
EM Latin America 2.64% -3.44%
Brazil 4.15% -6.38%
Mexico 0.73% 1.12%
Argentina 2.96% 30.43%
EM (Emerging Markets) 4.09% 8.64%
Hungary 4.50% 22.52%
India 3.40% 9.85%
Israel 0.10% 10.37%
Russia 7.80% 36.37%
Turkey -1.32% -14.04%

International Bond Markets

International bond markets in developed countries were higher this week, with the J.P. Morgan Global Government Bond Less U.S. Index losing -1.32%.

 
Region/Country Week's Return % Change Year-to-Date
Developed Markets -1.32% -4.74%
Europe    
Denmark -2.61% -7.53%
France -2.10% -8.56%
Germany -2.25% -8.93%
Italy -2.28% -7.24%
Spain -2.47% -8.88%
Sweden -1.65% -7.65%
United Kingdom -1.33% -3.45%
Japan -0.34% -0.62%
Emerging Markets 0.94% 10.29%
Argentina 4.21% 39.90%
Brazil 1.33% 10.53%
Russia 1.32% 6.00%

International Currency Markets

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

 
Currency Close
(04/10/2015)
Week's Return
(U.S. $)
% Change
Year-to-Date (U.S. $)
Japanese yen 120.205 0.38% 0.26%
Euro 1.06271 2.35% 12.18%
British pound 1.46541 1.18% 6.02%

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.