Week in Review: Crystal Ball Fogs Up Again

U.S. equity markets stumbled this week as investors again fretted about the pace of recovery, given sluggish-looking data in home sales, durable goods, and availability of future stimulus dollars.

Even the ubiquitous BlackBerry is breathing hard under the pressure of this recession, according to maker  Research in Motion (RIMM). Corporate bond prices appear steady, though, amid all the worries. Weakness in energy, copper, and grains stemmed from related uncertainty over global demand.

The Morningstar US Market Index ended the week down in nearly every style and sector category. The Morningstar Value Index was down nearly 3% for the week on stock weakness at select names such as  AMR ,  Prudential (PRU),  AIG (AIG), and  Gaylord Entertainment (GET). It should be noted, however, that these names have all rallied strongly this summer.

Outside the United States, equity markets were down this week as well. The Morningstar Developed Ex-US Index was down 1.6% for the week, while the Morningstar Emerging Markets Index was down about 1%. The indexes were in positive territory up to midweek.

The U.S. bond market continues to hum along in the background. The Morningstar Core Bond Index was up modestly again this week as government, corporate, and mortgage bond prices pushed indexes higher. The story this year continues to be in corporate bonds, especially the long-dated issues. The Morningstar Long Term Corporate Bond Index is now up nearly 20% for the year, as investors seized a golden opportunity this spring to buy deeply discounted issues in investment-grade companies.

The Morningstar Long-Only Commodity Index was down a sharp 5% this week as investors worried about the strength of the global economic recovery. Sellers sent energy, copper, grain, and meat commodities down nearly 10% in some cases. Natural gas was the beneficiary of the new capital and rallied about 10% this week, a reversal from a summer of steep declines because of ongoing news of ample inventory.

Bond Index One-Week Returns (Data as of 09-24-09)
	1 Wk Return (%)	Yield	Duration
Core Bond	0.19	3.02	4.14
US Government Bond	0.17	2.15	4.96
Corporate Bond	0.31	4.39	5.97
Mortgage Bond	0.15	3.04	2.36

 

Commodity Index One-Week Returns (Data as of 09-24-09)
	1-Week Return %	YTD Return %
Long-Only Commodity	-4.76	7.04
Long/Flat Commodity	-2.34	0.58
Long/Short Commodity	-1.71	-2.73

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