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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 October 24, 2014

    Stocks see biggest weekly gain in nearly two years
    The Standard & Poor's 500 Index recorded its best weekly gain since the start of 2013, as investors celebrated some better-than-expected earnings and grew more hopeful about the global economy. Poor results from IBM were partly to blame for the narrowly focused Dow Jones Industrial Average lagging the broader S&P 500, as was the Dow's exclusion of strongly performing Apple. The gains, however, brought both of the large-cap benchmarks within a few percentage points of their all-time highs. The technology-heavy Nasdaq outperformed the other major benchmarks. The rally also lifted the small-cap Russell 2000 Index out of what is commonly considered correction territory, bringing it within 10% of its highs earlier this year

    Earnings surprise again on the upside
    As usual, quarterly earnings reports from major companies brought both positive and negative surprises, but profits generally appeared to be growing faster than anticipated—a factor that drove market gains earlier in the year. Analytical firm FactSet increased its estimate of earnings growth in the third quarter for the companies in the S&P 500 to 5.6%, well in excess of the 4.5% expansion expected before the reporting season began. Surprisingly good results from the heaviest-weighted company in the index, Apple, fed into a rally Tuesday and helped establish a positive tone for the week.

    Reassuring news on global economy boosts sentiment
    Good news about the global economy also helped investors regain confidence following three weeks of losses. Stocks took another leg up on Thursday, after an array of data showed manufacturing activity increasing in China; Japan; and even Europe, which has demonstrated other signs recently of falling back into recession. Investors were also encouraged by reports that the European Central Bank was considering additional steps to boost growth in the region. U.S. economic data were generally benign. Investors were encouraged that existing home sales reached their highest level in a year in September, although new home sales did not grow quite as fast as anticipated.

    Global threats cause a brief pullback
    Other global threats kept investors on edge but did not seriously weigh on sentiment. News of a shooting at the Canadian parliament appeared to disrupt the market's advance on Wednesday, although a surprising rise of U.S. crude inventories hit oil stocks and may have also sparked the selling. Reports that a doctor in New York had contracted Ebola while working in Africa appeared to unsettle investors briefly, but the good news that the two Dallas nurses with the disease had apparently been cured may have helped calm some of the fears that dragged stocks lower the previous week.

    Company-specific analysis may become more important
    Investors' dual focus on earnings and the overall macroeconomic environment is unlikely to change anytime soon. Nonetheless, many T. Rowe Price managers expect that an individual company's earnings will become a more important driver of stock performance in the coming months. With the financial crisis and its dramatic policy response fading into the background, many of the factors that have taken stocks up and down in unison are likely to become less common—even if the markets are periodically volatile. T. Rowe Price managers also believe that careful fundamental research will be necessary to find opportunities, especially with overall valuations unlikely to expand significantly.

    U.S. Stocks1
    Index2 Friday's Close Week's Change % Change
    Year-to-Date
    DJIA 16805.41 425.00 1.38%
    S&P 500 1964.58 77.82 6.29%
    NASDAQ Composite 4483.72 225.28 7.35%
    S&P MidCap 400 1377.14 55.28 2.58%
    Russell 2000 1118.81 34.87 -3.85%
    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 October 24, 2014

    Reports that ECB may buy corporates ease Europe concerns
    The combination of generally positive U.S. economic data and news that the European Central Bank (ECB) may consider buying corporate bonds drove U.S. Treasury prices down, pushing yields up from the previous week's lows. Reports that the ECB could expand its asset purchase plan to include corporate debt helped ease concerns about deflation in Europe and moderated the flight to safety into Treasuries.

    Bargain hunters boost high yield bonds
    Investor sentiment toward high yield bonds improved dramatically after last week's sell-off as bargain hunters eagerly moved back into the asset class to take advantage of the more attractive yields. However, investment-grade corporate bonds experienced increased volatility and selling pressure, particularly for debt rated BBB (the lowest investment-grade credit rating) and from issuers in commodities-related businesses. Investors preferred newly issued bonds- Verizon sold $6.5 billion of new investment-grade debt in a vastly oversubscribed deal.

    Down week for municipal debt
    Municipal bonds posted losses amid increased volatility, driving yields up from last week's low point for 2014. In a reversal of the trend that has persisted for the bulk of this year, demand was fairly low while the supply of new municipals was relatively high as troubled issuers Detroit and Puerto Rico came to market with new bonds.

    All eyes on runoff election in Brazil
    Emerging markets bonds in general performed well in a week with slow news flows from developing countries. Investors nervously awaited this weekend's second-round presidential election in Brazil, a major emerging markets debt issuer. Polls began to show incumbent Dilma Rousseff leading challenger Aecio Neves, who investors think would be more likely to implement reforms to boost the country's economy and markets.

    U.S. Treasury Yields1
    Maturity October 24, 2014 October 17, 2014
    2-Year 0.39% 0.37%
    10-Year 2.27% 2.20%
    30-Year 3.05% 2.98%

    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, October 24, 2014.

    Week Ended October 24, 2014

    International Stocks

    Foreign stock markets closed lower for the week ending October 17, 2014 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), losing -0.65%.

     
    Region/Country Week's Return % Change Year-to-Date
    EAFE 2.39% -4.56%
    Europe ex-U.K. 2.16% -5.97%
    Denmark 3.92% 11.17%
    France 1.65% -8.83%
    Germany 0.80% -13.51%
    Italy 3.42% -1.84%
    Netherlands 1.29% -7.95%
    Spain 3.42% 0.09%
    Sweden 3.16% -6.44%
    Switzerland 2.66% -0.20%
    United Kingdom 1.20% -5.27%
    Japan 4.07% -6.21%
    AC Far East ex-Japan 1.72% 2.19%
    Hong Kong 1.37% 6.39%
    Korea 2.22% -8.87%
    Malaysia 1.79% -1.82%
    Singapore 1.65% 1.48%
    Taiwan 2.16% 6.75%
    Thailand 1.28% 21.38%
    EM Latin America -3.57% -2.35%
    Brazil -6.98% -3.01%
    Mexico 0.74% -0.27%
    Argentina 6.39% 22.61%
    EM (Emerging Markets) 0.79% 0.70%
    Hungary -2.79% -18.34%
    India 3.27% 24.70%
    Israel 3.80% 19.74%
    Russia -2.94% -24.68%
    Turkey 5.92% 15.48%

    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 gaining 0.96%.

     
    Region/Country Week's Return % Change Year-to-Date
    Developed Markets 0.97% 1.16%
    Europe    
    Denmark -1.01% -0.12%
    France -0.84% 0.04%
    Germany -0.98% -0.90%
    Italy -0.88% 2.40%
    Spain -0.87% 4.26%
    Sweden -1.13% -2.71%
    United Kingdom -0.40% 6.10%
    Japan -1.35% -0.31%
    Emerging Markets 0.13% 8.39%
    Argentina 3.95% 16.97%
    Brazil -0.80% 9.30%
    Russia 0.43% 1.07%

    International Currency Markets

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

     
    Currency Close
    (10/24/2014)
    Week's Return
    (U.S. $)
    % Change
    Year-to-Date (U.S. $)
    Japanese yen 108.165 1.39% 2.83%
    Euro 1.26691 0.78% 8.06%
    British pound 1.60821 0.10% 2.90%

    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.