Weekly Update: Markets Signaling Clearer Skies Ahead
A number of economic indicators are piling up and pointing to brighter times.
Market Update
Only one out of the past four weeks' equity returns was negative, reflecting confidence in the U.S. economy. While it is hard to say if this is durable or not, a number of economic indicators are piling up and pointing to brighter times ahead. For example, the Reuters/University of Michigan index of consumer sentiment rose more than expected to 70.2.
The Morningstar US Market Index rose 2.9% for the week, with a year-to-date return of 19.4%. Small stocks continued to increase more than their larger brethren. The Morningstar Large Cap Index rose 2.41% and the Morningstar Small Cap Index advanced 4.65%. Growth stocks and value stocks rose similarly.
All sectors were in the black, led by the media sector, up 5.8%. Walt Disney (DIS) is the largest holding in the Morningstar Media Sector Index, and it was up 11.6%.
The market reacted positively to Disney's announced purchase of superhero-giant Marvel, which shows executives there have confidence in the future as well.
The Morningstar Core Bond Index ended up 0.24% for the week. Gains were across the board. The Morningstar US Government Bond Index rose 0.05% while the Morningstar Corporate Bond Index increased 0.47%. The spread between Treasury and corporate bonds is 234 basis points and remains at elevated levels compared with the historical levels of around 100 to 150 basis points.
The Morningstar Long-Only Commodity Index increased 1.67%. The energy sector was up the most, thanks to natural gas jumping 16% for the week. The rally began after Energy Department data showed a smaller-than-forecast increase in U.S. stockpiles. Also supporting the rally is positive sentiment on the U.S. economy. If the U.S. economy starts to grow again, demand for energy will increase as well. The Morningstar Long/Short Index lost 0.1%, owing in part to the cash position instead of a long position in natural gas.
| Bond Index One-Week Returns (Data as of 09-10-09) | |||
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| 1 Wk | Yield | Duration |
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| Core Bond | 0.24 | 3.05 | 4.15 |
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| US Government Bond | 0.05 | 2.13 | 5.00 |
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| Corporate Bond | 0.47 | 4.47 | 5.98 |
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| Mortgage Bond | 0.29 | 3.10 | 2.35 |
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| Commodity Index One-Week Returns (Data as of 09-10-09) | ||
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| 1-Week Return % | YTD Return % | |
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| Long-Only Commodity | 1.67 | 9.68 |
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| Long/Flat Commodity | 0.06 | 1.54 |
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| Long/Short Commodity | -0.09 | -1.73 |
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For more information, call +1 312 384-3735. Daily updates and historical values are available at http://indexes.morningstar.com
Note: This article was corrected after original publication. Please click here for details.