As of October 30, 2009
 
n      An uncertain economy produced heightened volatility in the stock market this week, as investors grappled with whether the recent run in stock prices was excessively optimistic. U.S. markets surged on Thursday after GDP data indicated an end to the recession, but retreated Friday on declines in personal spending and consumer confidence. Meanwhile, European stocks posted their largest weekly drop since July, while the U.K. had its worst week since March. Asian markets were also down, despite a Friday rally on better-than-expected earnings and improving employment data out of Japan.
 
n      The CBOE Volatility Index (VIX) surged more than 20% on Friday to reach its highest levels since July. For the week, the index was up nearly 40%, indicating markedly higher concern among traders.
 
n      The most recent GDP data release suggested that the U.S. has emerged from its longest recession since World War II; official confirmation of the recovery awaits word from the National Bureau of Economic Research. GDP growth of 3.5% for the third quarter was slightly ahead of consensus. However, two of the major sources of growth in the quarter — consumption spending and housing — were at least partially supported by government programs. The removal of these stimuli (“Cash for Clunkers” has already expired) will likely dampen GDP growth going forward.
 
n      Other economic releases last week continued to be mixed. Durable goods and capital goods orders increased in September, and there was a sharp spike in the Chicago purchasing managers index, though it was not echoed in the neighboring Milwaukee region. Consumption spending by U.S. households fell and household income remains weak, pressures that led to a renewed decline in consumer confidence. 
 
n      Despite all the talk about the dollar losing its standing as the global reserve currency, there seems to be no end to investor appetite for U.S. government debt. The Treasury sold a record $123 billion in notes during the week in four auctions, each of which was heavily oversubscribed.
 
 
 
 

 

 

 

 
 

 

 

 
Source: FactSet, Bloomberg
 
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Index Definitions
 
Barclays Capital Global Aggregate Bond Index measures a wide range of global government, government-related, corporate and securitized fixed-income investments, all with maturities greater than one year.
 
Barclays Capital High-Yield Bond Index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market.
 
Barclays Capital U.S. Aggregate Index is a bond market index composed of US securities in Treasury, Government-Related, Corporate, and Securitized sectors that are of investment-grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $250 million.
 
Dow Jones Industrial Average is a price-weighted average computed from the stock prices of 30 of the largest and most widely held public companies in the United States, adjusted to reflect stock splits and stock dividends.
 
FTSE EPRA/NAREIT Global Real Estate Index represents general performance trends of the equity securities of real estate companies involved in the ownership, disposition and development of income-producing properties worldwide.
 
JPMorgan Emerging Markets Bond Index Plus (EMBI+) tracks total returns for traded foreign currency denominated debt instruments in the emerging markets which meet minimum criteria for face value outstanding and market trading liquidity.
 
MSCI EAFE Index is a free float-adjusted market capitalization weighted index designed to measure developed markets’ equity performance, excluding the US & Canada, for 21 countries.
 
MSCI Europe ex-U.K. Index is a free float-adjusted market capitalization weighted index designed to measure equity performance of the 15 developed European markets except the United Kingdom.
 
MSCI U.K. Index is a free float-adjusted market capitalization weighted index designed to measure equity performance of listed common stocks in the United Kingdom.
 
MSCI Asia ex-Japan Index is a free float-adjusted market capitalization weighted index designed to measure equity performance of the 15 developed Asian markets except Japan.
 
MSCI Japan Index is a free float-adjusted market capitalization weighted index designed to measure equity performance of listed common stocks in Japan.
 
MSCI Emerging Markets Index is a free float-adjusted market capitalization index that measures emerging market equity performance of 22 countries.
 
Municipal Bond Index is a bond index that includes investment-grade, tax-exempt fixed-rate bonds with long-term maturities (greater than two years) selected from issues larger than $50 million.
 
NASDAQ Composite Index is a market capitalization weighted index of the performance of domestic and international common stocks listed on The Nasdaq Stock Market including over 2,800 securities.
 
Russell 1000 Growth Index measures the large-cap growth segment of the U.S. equity market including Russell 1000 companies with higher price-to-book ratios and forecasted growth.
 
Russell 1000 Value Index measures the large-cap value segment of the U.S. equity market including Russell 1000 companies with lower price-to-book ratios and lower expected growth.
 
Russell Midcap Growth Index measures the performance of the mid-cap growth segment of the U.S. equity market including Russell Midcap Index companies with higher price-to-book ratios and forecasted growth.
 
Russell Midcap Value Index measures the performance of the mid-cap growth segment of the U.S. equity market including Russell Midcap Index companies with lower price-to-book ratios and forecasted growth.
 
Russell 2000 Growth Index measures the performance of small-cap growth stocks in the U.S. equity market including Russell 2000 companies with higher price-to-value ratios and forecasted growth.
 
Russell 2000 Value Index measures the performance of small-cap growth stocks in the U.S. equity market including Russell 2000 companies with lower price-to-value ratios and forecasted growth.
 
S&P 500 Index is a widely regarded as the best single gauge of the U.S. equities market, including 500 leading companies in major industries of the U.S. economy.
 
S&P 500 Sectors are defined as the GICS (Global Industry Classification Standard) sectors which provide standardized industry definitions consisting of 10 sectors, 24 industry groups, and 68 industries.
 
 
 
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