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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 April 17, 2014

Stocks rebound as investors welcome earnings surprises

Stocks recorded strong gains, nearly wiping out last week's losses as investors welcomed some better-than-expected corporate earnings reports. Many high-growth, highly valued stocks—which had seen sharp declines in previous sessions—continued to lag early in the week as investors favored larger, more stable "blue chip" companies. Such "momentum" shares rallied into the close of the week, however. Trading ended Thursday as Wall Street is closed on Friday in observance of Good Friday.

A brighter picture for bank earnings

After being disappointed in the previous week by some of the initial quarterly earnings reports, investors seemed largely cheered by the next round of figures. Earnings from two large banks surprised on the upside, helping compensate for disappointing results reported by other banks last Friday. Tech earnings were more mixed, with heavily weighted Google falling sharply after missing sales estimates. Analysts continue to expect earnings for the S&P 500 as a whole to decline roughly 1%-2% in the first quarter from the same period last year before rebounding in the second quarter.

Spring thaw seems on its way

Investors also appeared more encouraged by economic data. The Federal Reserve reported that industrial production rose solidly in March, furthering hopes that the economy would enjoy a spring thaw after a slowdown caused by unusually severe winter in much of the country. Weekly jobless claims ticked upward, but the four-week moving average fell to its lowest level since October 2007.

Better weather helps retail sales

Brighter retail sales data were another indicator that the economy's slowdown early in 2014 could be at least partially attributed to the bad weather. T. Rowe Price Chief Economist Alan Levenson notes that a strong gain in March retail sales reflects a rebound in the income of hourly workers, whose work is especially vulnerable to weather-related delays.

Fed policy likely to play smaller role in driving equity markets

Comments from Fed Chair Janet Yellen on Wednesday and Thursday were generally interpreted as dovish—or supportive of continued low interest rates—and may have also boosted stock prices as the trading week ended. Many T. Rowe Price managers believe that Fed policy will take a back seat in driving stock returns in the coming months, however. As the Fed gradually winds down its stimulus program, fundamental factors such as corporate earnings, cash flow, and jobs growth should become more important in assessing the health of individual companies and the overall economy. The transition from a liquidity-driven to a fundamentals-driven market is likely to increase the importance of careful stock selection, in our opinion.

U.S. Stocks1
Index2 Friday's Close Week's Change % Change
Year-to-Date
DJIA 16408.54 381.79 -1.01%
S&P 500 1864.85 49.16 0.89%
NASDAQ Composite 4095.52 95.79 -1.94%
S&P MidCap 400 1352.55 34.00 0.75%
Russell 2000 1139.13 26.83 -2.11%
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, 2014

10-year Treasury yield rises on positive economic data

The yield on the benchmark 10-year Treasury note rose during the holiday-shortened trading week, as positive U.S. economic data outweighed concerns about a possible escalation of the territorial dispute between Russia and Ukraine. The Commerce Department reported that March retail sales were stronger than expected and raised its initial estimate of February's retail sales growth. In a sign of renewed health in the labor market, the four-week average of weekly initial jobless claims dropped to its lowest level since October 2007.

Focus on Eastern Europe in emerging markets

Emerging bond markets focused on the geopolitical tensions in Eastern Europe as unrest continued in the eastern portion of Ukraine. Russia's first-quarter 2014 gross domestic product (GDP) contracted 0.5% quarter-over-quarter, although year-over-year economic growth remained positive at 0.8%. We expect economic sanctions and structural headwinds to weigh significantly on Russian growth for the rest of 2014. China reported that its GDP grew at a 7.4% year-over-year rate in the first quarter, slightly below the government's 7.5% target for 2014.

Quiet week for corporate bonds

Corporate bond markets had a relatively quiet week as credit spreads on investment-grade debt were nearly unchanged. (Credit spreads measure the additional yield that investors demand as compensation for holding a bond with credit risk versus a similar-maturity Treasury security.) High yield bond returns were also largely flat amid quiet trading, although there was news of a couple of large mergers involving high yield issuers.

Vigorous demand, limited supply boost municipal bonds

Municipal bonds posted positive returns as demand for tax-exempt debt continued to outpace supply, driving yields lower. The ratio of the average 10-year municipal yield to the 10-year Treasury yield fell to 86%, the lowest level since May 2011.

U.S. Treasury Yields1
Maturity April 17, 2014 April 11, 2014
2-Year 0.40% 0.35%
10-Year 2.72% 2.62%
30-Year 3.52% 3.48%

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, 2014.

Week Ended April 11, 2014

International Stocks

Foreign stock markets closed lower for the week ending April 11, 2014 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), losing -1.79%.

 
Region/Country Week's Return % Change Year-to-Date
EAFE -1.79% -0.13%
Europe ex-U.K. -1.66% 2.75%
Denmark -2.78% 12.89%
France -1.24% 3.04%
Germany -2.48% -1.99%
Italy -2.69% 13.13%
Netherlands -1.89% -0.49%
Spain -2.69% 4.84%
Sweden -1.46% 1.39%
Switzerland -0.38% 4.46%
United Kingdom -1.04% -0.91%
Japan -4.99% -9.64%
AC Far East ex-Japan 1.69% 1.63%
Hong Kong 2.24% 3.03%
Korea 2.10% 1.80%
Malaysia 1.63% 0.59%
Singapore 0.71% 0.73%
Taiwan 1.47% 3.55%
Thailand 1.26% 9.71%
EM Latin America 2.19% 4.00%
Brazil 3.62% 8.72%
Mexico -0.83% -5.17%
Argentina 0.69% 7.42%
EM (Emerging Markets) 1.39% 1.86%
Hungary 1.25% -5.25%
India 1.41% 8.88%
Israel -0.53% 20.75%
Russia -2.52% -16.23%
Turkey 0.33% 11.58%
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 1.66%.

 
Region/Country Week's Return % Change Year-to-Date
Developed Markets 1.66% 4.68%
Europe    
Denmark 1.82% 3.96%
France 1.55% 4.14%
Germany 1.76% 3.78%
Italy 1.17% 6.74%
Spain 1.18% 7.21%
Sweden 0.87% 1.71%
United Kingdom 1.40% 4.49%
Japan 2.03% 4.45%
Emerging Markets 0.86% 5.16%
Argentina -0.76% 9.48%
Brazil 0.99% 5.14%
Russia -0.39% -0.87%
International Currency Markets

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

 
Currency Close
(April 11, 2014)
Week's Return
(U.S. $)
% Change
Year-to-Date (U.S. $)
Japanese yen 101.640 -1.90% -3.41%
Euro 1.38881 -1.42% -0.78%
British pound 1.67221 -0.79% -0.96%
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.