U.S. Recovery Gains 'Votes'
For now, the market's voting machine is favoring the bulls.
Market Update
In the short run, famed investor Benjamin Graham said, the equity market is a voting machine, and in the long run, it is a weighing machine.
On the one hand, the seven-month streak of positive equity returns was broken in October. Weaker-than-expected economic news explains part of this turnabout in performance. The economic news did not improve this week, either, as the U.S. unemployment rate rose to a 26-year high of 10.2% in October and wholesale inventories continued to shrink.
On the other hand, the Morningstar US Market Index rose 3.3% for the week and was positive every day this week. Unlike for most of this year, there was more consistency in returns across the Morningstar style indexes. The Morningstar US Value Index gained 2.8%, and the Morningstar US Growth Index rose 3.8.
Large and small stocks performed similarly. In another sign of strength, merger and acquisition activity is alive and well, as Black & Decker succumbed to Stanley Works' (SWK) overtures. This made Black & Decker the biggest gainer in the Morningstar US Market Index.
The Morningstar Core Bond Index eked out a gain of 0.11% for the week and has a yield of 2.98%. The Morningstar US Government Bond Index gained 0.11% while the Morningstar Corporate Bond Index increased 0.04%. Despite this positive performance, Treasuries have lost 2.15% for the year, while corporate bonds have gained 15.86%.
The Morningstar Long-Only Commodity Index was virtually flat, down 0.03%, but it is up 15.25% for the year. The Morningstar Metals Commodity Index topped all other sectors with a weekly gain of 2.66%. Gold continued to grind higher, with a return of 4%, and silver rose 4.5%.
On the flip side, natural gas fell again by 5.6%. The Morningstar Long/Short Index gained 0.15%.
For now, the votes are favoring the bulls.
| Bond Index One-Week Returns (Data as of 11-05-09) | |||
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| 1 Wk | Yield | Duration |
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| Core Bond | 0.11 | 2.98 | 4.20 |
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| US Government Bond | 0.11 | 2.18 | 4.92 |
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| Corporate Bond | 0.04 | 4.33 | 5.91 |
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| Mortgage Bond | 0.16 | 3.00 | 2.55 |
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| Commodity Index One-Week Returns (Data as of 11-06-09) | ||
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| 1-Week Return % | YTD Return % | |
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| Long-Only Commodity | -0.03 | 15.25 |
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| Long/Flat Commodity | 0.25 | 2.48 |
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| Long/Short Commodity | 0.15 | -3.94 |
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For more information, call +1 312 384-3735. Daily updates and historical values are available at http://indexes.morningstar.com