Weekend Market X-Ray: Markets Shake Off Swine Flu Fears
Signs that the U.S. economic contraction may be slowing pushed stocks higher.
Market Update
U.S. equity markets ended this week up nearly 1.5%, as investors moved past Monday's swine flu news and embraced the positive message from the Fed Wednesday that the U.S. economic contraction may be slowing. Bonds were mixed as government bond prices softened while corporate bond prices firmed. Commodities were mixed as well as oil prices followed equities up again this week while pork and precious metals fell.
The Morningstar US Market Index ended the week up 1.4% as investors found additional good news in remarks made by the Fed Wednesday indicating the U.S. economy is deteriorating at a slower rate than it was earlier this year. The Morningstar Small Growth Index was up about 3% thanks to good news at Green Mountain Coffee Roasters , Human Genome Sciences , and Silicon Labs (SLAB). The Morningstar Emerging Markets Index was up again this week and is now up 16% for the year versus a flat reading for the US Market Index, underscoring the benefits of diversification.
The Morningstar Core Bond Index remained mixed again this week. The Morningstar Corporate Bond Index rose 0.6% as investors embraced more credit risk in their fixed-income portfolios. The Morningstar US Government Bond Index fell about the same amount as supply continued to enter the market and investors demanded more yield to hold longer-term instruments. The Morningstar Long Term US Government Bond Index is now down over 7% year to date leaving a very steep yield curve in its wake.
The Morningstar Long-Only Commodity Index was up nearly 1% this week as oil rallied on hopes of renewed industrial demand for petroleum. Gold fell as investors rotated out of this safe-haven holding. Pork prices fell 8% on misguided fears of contracting the unfortunately named swine flu virus through meat consumption.
| Bond Index One-Week Returns (Data as of 04-30-09) | |||
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| 1 Wk | Yield | Duration |
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| Core Bond | -0.16 | 3.31 | 3.87 |
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| US Government Bond | -0.66 | 2.08 | 4.87 |
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| Corporate Bond | 0.56 | 6.39 | 5.46 |
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| Mortgage Bond | -0.03 | 2.92 | 2.09 |
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| Commodity Index One-Week Returns (Data as of 04-30-09) | ||
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| 1-Week Return % | YTD Return % | |
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| Long-Only Commodity | 0.87 | -2.62 |
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| Long/Flat Commodity | -0.08 | -0.59 |
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| Long/Short Commodity | -0.22 | -4.23 |
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For more information, call +1 312 384-3735. Daily updates and historical values are available at http://indexes.morningstar.com