• Log In Log Out
  • 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 August 15, 2014

    Stocks modestly higher in light trading

    Stocks were higher in a week of thin summer trading. The gains helped the Dow Jones Industrial Average move into positive territory for the year, but the Nasdaq Composite saw the strongest increase. The Nasdaq ended the week down only 1% from its recent peak, the smallest margin among the major indexes. The small-cap Russell 2000 Index has fared the worst in recent weeks, falling nearly 7% from its all-time high.

    Corporate earnings season winds down

    The major equity indexes drifted higher throughout much of the week, although it was hard to determine the specific factors responsible for the gains. The corporate earnings season came nearer to a close, with only a relatively small number of companies reporting second-quarter results. Still, investors may have continued to celebrate a generally successful pattern of corporate profit gains.

    Retail sales disappoint

    The week's flow of economic data was relatively thin, and several figures proved disappointing. Most notably, retail sales growth was flat in July, a setback that T. Rowe Price chief economist Alan Levenson attributes in part to temporary weakness in hourly earnings. He expects that improvements in employment and earnings in August should result in higher spending, however.

    Consumer sentiment declines

    Stalled wages may have also been partly responsible for a decline in consumer sentiment, reported Friday. The Thomson Reuters/University of Michigan preliminary reading on consumer attitudes fell to its lowest level since last November, while its measure of consumer expectations declined for the fourth straight month. Some observers had expected an increase in sentiment, due to recent payroll gains and falling gasoline prices.

    Ukraine worries send stocks lower

    It has been difficult to gauge the effect of ongoing international crises on consumers, but the turmoil has had a clear influence on investor sentiment. After signs of conciliation helped drive stock gains last week, the situation in Ukraine appeared to relapse on Friday morning. Stock prices fell sharply as news broke of a confrontation between Ukrainian military forces and a Russian armored convoy that had crossed the border. Russia denied the incident, however.

    Low interest rates may help stocks

    The overall effect of global turmoil on stock prices is unclear, however. Along with mixed economic data, international unrest has furthered expectations in recent weeks for continued low interest rates; indeed, the yield on the 10-year Treasury note fell to its lowest level in over a year during the week. Very low interest rates on bonds have heightened the relative appeal of stocks, while also helping shore up corporate balance sheets by reducing borrowing costs.

    U.S. Stocks1
    Index2 Friday's Close Week's Change % Change
    Year-to-Date
    DJIA 16662.91 108.98 0.52%
    S&P 500 1955.06 23.47 5.77%
    NASDAQ Composite 4464.93 93.90 6.90%
    S&P MidCap 400 1395.77 16.74 3.97%
    Russell 2000 1141.39 9.71 -1.91%
    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 August 15, 2014

    Low safe-haven yields, geopolitical worries drive Treasury yields down

    The yield on 10-year German government bonds, known as bunds, fell below 1% for the first time ever following the release of data indicating that Germany's economy contracted slightly in the second quarter. Indeed, second-quarter gross domestic product for the entire eurozone was flat. The meager yields available on other safe-haven sovereign debt, including bunds, contributed to the attraction of U.S. Treasuries. This, combined with ongoing geopolitical stresses, drove the 10-year Treasury yield below 2.35%.

    Rebound in high yield bonds

    The high yield corporate bond market experienced some inflows and continued to recover from its late-July sell-off. Last month's selling pressure created more attractive valuations for high yield bonds, and the summer slowdown in new issues allowed investors to focus on bonds in the secondary market that had traded down in recent weeks. Investment-grade corporate bonds trailed high yield securities for the week, likely because they did not have the same sell-off last month and so had less room to rebound.

    Emerging markets debt sentiment improves in light trading

    Trading volume in emerging markets debt was light, although the tone of the market seemed to improve. Brazil, a major emerging markets bond issuer, was in the spotlight following the tragic death of Eduardo Campos, a presidential candidate and leader of the Brazilian Socialist Party, in an airplane crash. The country also released economic data showing auto-sector layoffs, weak hiring in service industries, and disappointing retail sales.

    New York City, Port Authority sell large new municipal bonds

    The municipal bond market met new issues with decent—but not overwhelming—demand. New York City issued nearly $1 billion of new general obligation municipals, and the Port Authority of New York and New Jersey also brought a large new deal to market during the week.

    U.S. Treasury Yields1
    Maturity August 15, 2014 August 8, 2014
    2-Year 0.41% 0.44%
    10-Year 2.34% 2.42%
    30-Year 3.14% 3.23%

    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, August 15, 2014.

    Week Ended August 15, 2014

    International Stocks

    Foreign stock markets closed higher for the week ending August 15, 2014 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 1.71%.

     
    Region/Country Week's Return % Change Year-to-Date
    EAFE 1.71% 1.52%
    Europe ex-U.K. 1.14% -0.89%
    Denmark 1.70% 14.29%
    France 0.52% -2.80%
    Germany 0.74% -7.58%
    Italy 1.15% 3.12%
    Netherlands 1.55% -4.66%
    Spain 0.69% 4.24%
    Sweden 2.16% -1.44%
    Switzerland 1.26% 3.54%
    United Kingdom 1.45% 2.58%
    Japan 2.89% 0.26%
    AC Far East ex-Japan 2.55% 9.91%
    Hong Kong 2.02% 10.39%
    Korea 3.12% 4.97%
    Malaysia 2.99% 4.33%
    Singapore 1.18% 7.52%
    Taiwan 2.25% 12.87%
    Thailand 3.18% 23.97%
    EM Latin America 2.97% 10.86%
    Brazil 3.80% 14.90%
    Mexico 2.30% 5.77%
    Argentina -5.59% 16.41%
    EM (Emerging Markets) 2.86% 9.50%
    Hungary 2.27% -15.51%
    India 3.94% 24.60%
    Israel -1.65% 18.28%
    Russia 5.44% -11.69%
    Turkey -3.98% 15.11%
    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 0.11%.

     
    Region/Country Week's Return % Change Year-to-Date
    Developed Markets 0.11% 5.79%
    Europe    
    Denmark 0.12% 4.12%
    France 0.28% 5.41%
    Germany 0.21% 3.88%
    Italy 1.03% 7.80%
    Spain 1.28% 9.03%
    Sweden 0.71% 0.84%
    United Kingdom 0.03% 8.00%
    Japan -0.46% 4.73%
    Emerging Markets 1.19% 9.44%
    Argentina -7.34% 9.73%
    Brazil 1.71% 9.39%
    Russia 1.81% 0.55%
    International Currency Markets

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

     
    Currency Close
    (August 15, 2014)
    Week's Return
    (U.S. $)
    % Change
    Year-to-Date (U.S. $)
    Japanese yen 102.335 0.50% -2.69%
    Euro 1.33831 0.23% 2.88%
    British pound 1.66851 0.68% -0.74%
    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.