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Morningstar Indexes: Weekly Market Report

Week ending Nov. 17: Moderate inflation, lower energy prices push market highter.

Morningstar Indexes, 11/20/2006

Investors looked beyond a dramatic downturn in the housing market--new housing starts for October dropped 16%--and instead focused on signs of moderating inflation and lower energy prices to push the Morningstar US Market Index higher by 1.6% for the week ending Nov. 17. The US Market Index is up 3% for the past two weeks and 14.1% for the year.

The Morningstar Market Barometer was green across the board as all nine Morningstar style indexes gained ground for the second week in a row. Large-cap growth stocks continue to gain in strength over large-cap value stocks. The Morningstar Large Growth Index, which trails the Morningstar Large Value Index by 15% for the year, is steadily catching up, gaining 1.9% in the past two weeks alone.
 
The Morningstar Small Value Index was the best performer among the nine Morningstar style indexes. Index component Reader's Digest Association RDA saw its shares jump 11.4% last week after the announcement of a private equity deal with Ripplewood Holdings. Master-planned community developer WCI Communities' WCI shares rose 21.6%.

Investors sent US Airways Group's LCC stock soaring 20.6% after the nation's fifth largest airline made a bid to become the largest by acquiring bankrupt Delta Air Lines DALRQ. Other airline stocks were lifted on speculation of increased merger activity in the highly regulated and overcrowded U.S. airline industry. The shares of Morningstar Mid Value Index components Continental Airlines CAL, UAL UAUA, and AMR AMR closed the week up 16.7%, 13.5%, and 11.2%, respectively.

For a more in-depth look into market performance, view the PDF report U.S. Market Overview. Daily updates of index returns are available here.

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