Recovery Looks a Little Winded
U.S. equity markets were down this week on more news that the economic recovery isn't as spry as folks thought this summer.
Market Update
U.S. equity markets were down this week on more news that the economic recovery isn't as spry as folks thought this summer. Bond prices rose on strong government and corporate bond buying by investors.
In commodity markets, the U.S. government announced this week that natural gas inventories are at all-time highs, just after investors bid up November futures 20%-plus in September.
The Morningstar US Market Index ended down about 2% this week on growing investor uncertainty about the pace of the global economic recovery. Index declines were spread fairly evenly across style, market cap, and sector.
One area of note would be large-cap growth. A key contributor to the index was Walgreen's (WAG) 10% stock price jump this week. The firm's fourth-quarter earnings report exceeded expectations on strong prescription drug sales and traction in cost-cutting programs.
Internationally, equity markets were down slightly as developed market weakness was partially offset by equity gains in emerging markets.
The Morningstar Core Bond Index was up 0.6% this week thanks to strong increases in government and corporate bond prices. The Morningstar Corporate Bond Index is now up over 16% for the year, and this investment-grade index is yielding 4.3%.
The Morningstar Long-Only Commodity Index was up over 2% this week. Natural gas inventories continue to grow, while prices, which dropped all summer, have rebounded to the upper $4 per Btu range despite moderating 5% this week. The Morningstar Long/Short Index moved up 1.4% as the index's short wheat contract dropped 4% on strong production expectations. The index also benefited from its long position in sugar, which rose 7.6% for the week, continuing its robust rally fueled by weather-related supply problems.
| Bond Index One-Week Returns (Data as of 10-01-09) | |||
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| 1 Wk | Yield | Duration |
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| Core Bond | 0.61 | 2.82 | 4.10 |
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| US Government Bond | 0.90 | 2.04 | 5.05 |
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| Corporate Bond | 0.59 | 4.32 | 6.03 |
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| Mortgage Bond | 0.35 | 2.73 | 2.07 |
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| Commodity Index One-Week Returns (Data as of 10-01-09) | ||
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| 1-Week Return % | YTD Return % | |
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| Long-Only Commodity | 2.17 | 9.37 |
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| Long/Flat Commodity | 1.03 | 1.62 |
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| Long/Short Commodity | 1.39 | -1.38 |
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For more information, call +1 312 384-3735. Daily updates and historical values are available at http://indexes.morningstar.com