Morningstar Market X-Ray: Market Finally Finds the Green

U.S. equity markets were up significantly this week thanks to upbeat news in financial services, acquisition activity in health care, and general psychological relief among investors. Corporate bonds were weak again due to ongoing credit concerns for a wide range of firms. Commodities were mixed but corn prices jumped.

The Morningstar US Market Index rose nearly 11% for the week on news that large banks in the U.S. were stabilizing. A large part of the rally was due to a significant rise in bank stock prices. The Morningstar Financial Services Sector Index was up over 25% this week thanks to strong moves by  J.P. Morgan (JPM),  Wells Fargo (WFC), and  Bank of America (BAC).  General Electric (GE) stock was up as well due to additional information about the health of GE Capital. Blue-chip tech firms  Microsoft (MSFT),  Apple (AAPL),  Cisco (CSCO), and  Intel (INTC) were also up. The Morningstar Large Growth Index was up around 8% for the week. The equity style leader, however, was small value, driven by huge stock price increases at  Brinker (EAT),  Smithfield Foods , and  Williams-Sonoma (WSM).

The Morningstar Core Bond Index was down slightly this week. Corporate bonds took center stage as the Morningstar Corporate Bond Index fell 1.2% and now yields 7.3%. Over 1,600 of the 1,844 corporate bonds in the index declined in price this week. Most decliners were issued by large financial-services firms, although there were representative bonds from nearly every sector. General Electric bonds were notable gainers this week, thanks to a rating agency downgrade that was milder than expected. Treasury markets remained fairly stable despite another $63 billion in supply and pointed comments from China, a large holder of Treasury securities.

Commodities were mixed this week. Energy commodities were up while gold and silver recovered late in the week to end about flat. Corn prices were up significantly and ended the week up over 7%; the expectation is farmers will continue to shift away from corn in favor of soybeans in 2009.

Bond Index One-Week Returns
	1 Wk Return (%)	Yield	Duration
Core Bond	-0.26	3.70	3.82
US Government Bond	-0.38	2.11	5.01
Corporate Bond	-1.20	7.31	5.47
Mortgage Bond	0.31	3.48	1.93

 

Commodity Index One-Week Returns
	1-Week Return %	YTD Return %
Long-Only Commodity	1.81	-8.01
Long/Flat Commodity	-0.02	-0.42
Long/Short Commodity	-1.11	0.47

For more information, call +1 312 384-3735. Daily updates and historical values are available at http://indexes.morningstar.com