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 March 6, 2015

Stocks pull back following strong jobs report
Stocks declined for the second straight week. A sharp sell-off followed Friday's strong monthly jobs report, which appeared to increase the likelihood that the Federal Reserve will increase interest rates sooner rather than later. Typically defensive, dividend-paying sectors such as utilities performed poorly as investors anticipated that their appeal would diminish in the face of higher yields from fixed income securities.

After 15 years, Nasdaq climbs above 5,000 again
On Monday, the technology-laden Nasdaq Composite Index closed above 5,000 for the first time since 2000 and stood within one percentage point of its all-time closing high—although more than two percentage points off its intraday peak. The benchmark gave back some of these gains later in the week but fared better than its peers thanks to some strength in Apple, which represents roughly a tenth of the index. Apple's stock defied the Friday downdraft, seemingly due to the announcement that the company would replace AT&T as one of the 30 firms in the Dow Jones Industrial Average.

Bad weather does not slow job gains
With fourth-quarter earnings reporting season nearly over, economic conditions and Fed policy appeared to move back to the fore in driving investor sentiment. Throughout the week, investors eagerly awaited the Commerce Department's monthly payrolls report, considered by many to be the most important gauge of economic health. The unofficial tally of private sector job gains from payroll processing firm ADP, released Wednesday, proved moderately disappointing and may have lowered expectations for the Department of Labor report. On Friday morning, however, the government announced that employers added nearly 295,000 jobs in February—an especially good showing given tough weather in much of the country and widespread layoffs in the energy sector.

Despite weak nominal earnings gains, a change in Fed policy may be coming
Stocks initially wavered on the jobs report, perhaps because the very modest wage gains also included in the report suggest that inflation pressures will remain minimal. By mid-morning, however, a consensus appeared to emerge that the improving labor market would lead the Fed to increase short-term rates as early as this summer. T. Rowe Price Chief U.S. Economist Alan Levenson notes that real wages (accounting for inflation) are growing at a less sluggish pace than the nominal figures suggest, and he believes that a signal about a change in Fed policy may soon be at hand. The Fed's next monetary policy meeting will be held on March 17-18.

U.S. Stocks1
Index2 Friday's Close Week's Change % Change
Year-to-Date
DJIA 17,856.78 -275.92 0.19%
S&P 500 2071.26 -33.24 0.60%
NASDAQ Composite 4927.37 -36.16 4.04%
S&P MidCap 400 1486.17 -21.27 2.32%
Russell 2000 1218.14 -17.02 1.12%
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 March 6, 2015

Strong February U.S. employment numbers lead to sell-off in Treasuries
Another strong monthly employment report suggested that the Federal Reserve's first interest rate increase will come sooner rather than later this year, leading fixed income investors to sell U.S. Treasuries. The February nonfarm payrolls data showed a better-than-expected 295,000 jobs added, while the unemployment rate dropped to 5.5% from 5.7% in January. The yield on the benchmark 10-year U.S. Treasury note increased above the level where it started 2015. (Bond prices and yields move in opposite directions.)

ECB to start buying sovereign debt next week
The yield premium offered by the 10-year U.S. Treasury note over 10-year German government debt reached a record high as the European Central Bank's announcement that it will begin buying sovereign bonds next week pushed eurozone sovereign yields lower. Mario Draghi, the central bank's president, said that it will buy bonds with negative yields as long as they are above the bank's -0.2% deposit rate.

Flood of new investment-grade corporate bond issuance continues
New issuance continued to pour into the investment-grade corporate debt market, with the new deals oversubscribed amid strong investor demand for yield. Pharmaceutical company Actavis sold $21 billion of debt, the second-largest corporate bond offering ever, to fund its acquisition of Allergan, maker of Botox. In Europe, French utility GDF Suez sold €500 million of investment-grade notes with a 0% coupon, becoming the first company in more than 14 years to sell euro-denominated debt with no regular interest payments.

China and India cut interest rates
Emerging markets debt posted broadly negative returns in light trading ahead of the ECB announcement and Friday's U.S. employment report. Higher-rated emerging markets bonds, including the sovereign debt of Mexico, Columbia, and Peru, sold off along with U.S. Treasuries. Last weekend, China's central bank cut interest rates for the second time in four months in an effort to stimulate more economic growth. The central bank of India followed suit during the week, lowering its benchmark lending rate for the second time in 2015 and citing economic weakness in certain sectors.

U.S. Treasury Yields1
Maturity March 6, 2015 February 27, 2015
2-Year 0.72% 0.62%
10-Year 2.24% 2.00%
30-Year 2.89% 2.60%

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, March 6, 2015.

Week Ended February 27, 2015

International Stocks

Foreign stock markets closed higher for the week ending February 27, 2015 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 1.09%.

 
Region/Country Week's Return % Change Year-to-Date
EAFE 1.09% 6.52%
Europe ex-U.K. 1.36% 6.81%
Denmark 2.22% 10.53%
France 0.93% 7.32%
Germany 1.73% 8.03%
Italy 1.08% 8.39%
Netherlands 2.11% 6.82%
Spain 1.41% 0.28%
Sweden 1.96% 9.14%
Switzerland 1.06% 5.30%
United Kingdom 0.96% 5.21%
Japan 0.97% 8.55%
AC Far East ex-Japan 0.68% 3.93%
Hong Kong -0.35% 5.04%
Korea 1.00% 3.05%
Malaysia 1.49% 0.75%
Singapore -0.62% -2.10%
Taiwan 1.34% 4.73%
Thailand -0.71% 4.17%
EM Latin America 1.02% -2.20%
Brazil 1.09% -3.74%
Mexico 1.86% 0.99%
Argentina -1.70% 13.97%
EM (Emerging Markets) 0.61% 3.73%
Hungary 0.28% 6.08%
India 0.64% 9.95%
Israel -1.20% -1.10%
Russia -1.20% 21.87%
Turkey -4.14% -9.82%

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 -0.22%.

 
Region/Country Week's Return % Change Year-to-Date
Developed Markets -0.22% -2.34%
Europe    
Denmark -2.03% -3.45%
France -0.80% -4.89%
Germany -1.05% -5.33%
Italy 0.28% -3.08%
Spain 0.13% -4.56%
Sweden -0.36% -4.71%
United Kingdom 0.42% -0.09%
Japan -0.25% -0.36%
Emerging Markets 0.68% 7.53%
Argentina 3.95% 33.26%
Brazil -0.22% 6.29%
Russia -0.34% -4.34%

International Currency Markets

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

 
Currency Close
(02/27/2015)
Week's Return
(U.S. $)
% Change
Year-to-Date (U.S. $)
Japanese yen 119.545 0.66% -0.29%
Euro 1.12171 1.34% 7.31%
British pound 1.54541 -0.54% 0.89%

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.