Equity and Commodity Markets Take a Punch
Investors worry about the robustness of the U.S. economic recovery.
Market Update
U.S. equity markets were down strongly this week as investors worried about the robustness of the U.S. economic recovery, given weak numbers on industrial production, capacity utilization, and a dour outlook from Best Buy (BBY). On a good note for consumers, perhaps, commodities were in retreat as agricultural, livestock, metals, and even energy all saw price declines.
The Morningstar US Market Index ended the week down about 3% after a rough start Monday and Tuesday. Regional manufacturing data released Monday and weak guidance from Best Buy on Tuesday resulted in a one-two punch for U.S. equities this week. Around the world, equities had an even tougher time because of macroeconomic concerns. The Morningstar Global Equity Index family slid nearly 5% this week. Even developing-country stocks, which have been on fire this year, fell nearly 6%. The Morningstar Emerging Markets Index remains up about 35% for the year, however.
U.S. small-value stocks took quite a dive this week. The Morningstar Small Value Index fell about 4.5% and is now flat for the year, thanks to stock declines at Harman International , CIT Group , and Liz Claiborne . Large growth, meanwhile, was down less than half that this week; year to date, the Morningstar Large Growth Index remains up more than 15%.
The Morningstar Core Bond Index was up slightly on relative strength in corporate bonds and limited weakness in government or mortgage bonds. The Morningstar Corporate Bond Index was up nearly a half a percentage point this week as investors continue to rotate toward higher-yielding credits; the index is now up nearly 6% for the year.
The Morningstar Long-Only Commodity Index was down more than 3% this week but remains up more than 12% for the year. A strong dollar, demand worries, and recent weather weighed on many agricultural commodities. Corn, soybeans, coffee, cotton, and wheat prices were all down sharply this week.
| Bond Index One-Week Returns (Data as of 06-18-09) | |||
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| 1 Wk | Yield | Duration |
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| Core Bond | 0.31 | 3.87 | 4.86 |
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| US Government Bond | 0.17 | 2.58 | 4.81 |
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| Corporate Bond | 0.41 | 5.68 | 5.76 |
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| Mortgage Bond | 0.40 | 4.14 | 4.42 |
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| Commodity Index One-Week Returns (Data as of 06-18-09) | ||
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| 1-Week Return % | YTD Return % | |
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| Long-Only Commodity | -3.32 | 12.49 |
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| Long/Flat Commodity | -0.88 | 0.23 |
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| Long/Short Commodity | 1.19 | -5.42 |
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For more information, call +1 312 384-3735. Daily updates and historical values are available at http://indexes.morningstar.com