Markets Catch a Cold
Generally upbeat earnings couldn't lift an under-the-weather market this week.
Market Update
Despite quarterly earnings that generally beat Wall Street analysts' estimates, equity markets turned in a terrible week. One factor weighing on investors was more government regulations on big banks that could crimp those firms' ability to generate profits. Plus, the days of China's stimulus programs providing a tailwind to many global- and commodity-related companies may be ending.
Overall, the Morningstar US Market Index fell 3.7% for the week. Neither large nor small companies did well. The Morningstar Small Cap Index fell 3.1%, and the Morningstar Large Cap Index fell 3.9%.
Likewise, value and growth stocks were down this week The Morningstar US Value Index fell 3.7%, and the Morningstar US Growth Index fell 4.1%. Value was hurt by the financial services sector falling sharply after the new focus on bank regulation was revealed. The sector ended the week down 4.4%.
For example, Goldman Sachs Group (GS) reported strong earnings, but given the regulatory uncertainty, its shares ended the week down 12%. With China's stimulus effort in question, investors quickly wanted out of commodity-related firms, such as Freeport-McMoRan Copper & Gold (FCX), which fell 16%.
Fixed-income sectors turned in another positive week. The Morningstar Core Bond Index rose 0.49%. Treasuries and corporate bonds took similar paths this week. The Morningstar US Government Index gained 0.59%, and the Morningstar Corporate Bond Index rose 0.45%. The spread between Treasuries and credit remained at 188 basis points.
Commodities fell this week as well. The Morningstar Long-Only Commodity Index fell 2.72%. Metals continued to post solid results, but weakness in energy overwhelmed them. Unlike the past 12 months, the Morningstar Metals Index fell sharply, down 3.79%. The volatile energy sector took a hit, too, as the Morningstar Energy Index fell 6%.
| Bond Index One-Week Returns (Data as of 01-21-10) | |||
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| 1 Wk | Yield | Duration |
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| Core Bond | 0.49 | 2.86 | 4.22 |
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| US Government Bond | 0.59 | 2.14 | 4.88 |
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| Corporate Bond | 0.45 | 4.02 | 5.96 |
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| Mortgage Bond | 0.39 | 2.93 | 2.55 |
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| Commodity Index One-Week Returns (Data as of 01-21-10) | ||
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| 1-Week Return % | YTD Return % | |
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| Long-Only Commodity | -2.72 | -2.74 |
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| Long/Flat Commodity | -2.40 | -2.15 |
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| Long/Short Commodity | -2.09 | -1.53 |
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For more information, call +1 312 384-3735. Daily updates and historical values are available at http://indexes.morningstar.com