Little Love for U.S. Markets
The U.S. recovery still appears under way, but the global picture shows cracks.
Market Update
The U.S. recovery still appears under way. Overall retail sales in January rose 0.5%, showing that U.S. consumers are starting to pull more of their weight. Still, the global picture shows cracks in the form of more reductions in economic stimulus from China and the impact from the European aid package to Greece. In addition, European Union GDP data were weaker than expected.
Investors weighed the good and the bad, and the Morningstar US Market Index gained 1.3% for the week. This is only the second week this year posting positive returns for the index.
Small companies fared better than their larger counterparts. The Morningstar Small Cap Index rose 3.1%, and the Morningstar Large Cap Index rose 0.8%. Growth won this week's tug of war with value. The Morningstar US Growth Index rose 1.7%, and the Morningstar US Value Index gained 0.5%.
Technology stocks helped give the edge to growth, as the hardware sector posted one of the week's best performances, up 2.5%. On the other hand, the financial services sector fell again. Banks, such as Bank of America (BAC), are still reserving for credit losses in significant amounts, which have held back earnings.
The Morningstar Core Bond Index fell 0.46%. While so far the broad bond index is up for the year, its year-to-date return is now only 1.1%. Treasuries and corporate bonds both weighed on the index. The Morningstar US Government Index fell 0.42%, and the Morningstar Corporate Bond Index fell 0.88%. Investors still cheered the European Union's decision to back Greece, sending the Morningstar Global ex-US Government Bond Index up 1.6% on an unhedged basis.
Unlike bonds, commodities gained this week. The Morningstar Long-Only Commodity Index gained 2%. Metals regained the top spot this week, gaining 3.5%, although every sector was in the black.
| Bond Index One-Week Returns (Data as of 02-11-10) | |||
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| 1 Wk | Yield | Duration |
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| Core Bond | -0.46 | 3.00 | 4.38 |
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| US Government Bond | -0.42 | 2.20 | 4.85 |
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| Corporate Bond | -0.88 | 4.19 | 5.91 |
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| Mortgage Bond | -0.25 | 3.19 | 3.06 |
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| Commodity Index One-Week Returns (Data as of 02-11-10) | ||
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| 1-Week Return % | YTD Return % | |
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| Long-Only Commodity | 2.09 | -5.26 |
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| Long/Flat Commodity | 1.86 | -4.52 |
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| Long/Short Commodity | 1.63 | -3.90 |
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For more information, call +1 312 384-3735. Daily updates and historical values are available at http://indexes.morningstar.com