Market Week: October 17, 2011

The Markets Welcome relief: Equities built strongly on last week's gains as the Dow and Nasdaq surged back into positive territory for 2011. The S&P 500, NASDAQ, and Russell 2000 all had their strongest week of the year, with the tech-heavy NASDAQ and the small-cap Russell seeing the biggest gains. Little Slovakia provided at least some temporary reassurance about European bailout capabilities, which encouraged investors to drive bond yields higher as prices fell.

Last Week's Headlines After an initial negative vote, Slovakia provided the final ratification of expanded powers for the European Financial Stability Facility (EFSF), enabling it to buy bonds issued by troubled eurozone countries. Meanwhile, there were more ratings downgrades: Standard & Poor's cut Spain to AA- with a negative outlook, indicating additional downgrades are likely in the future. It also downgraded several Spanish banks, while Fitch cut the ratings of four other European banks. A 1.1% improvement in September's retail sales represented the biggest increase in seven months, though the figures are not adjusted for price increases. A 3.6% increase in auto sales helped a lot after having been hurt earlier in the year by parts shortages. According to the Commerce Department, even without autos, retail sales still rose 0.6%. Minutes of last month's Federal Reserve Open Markets Committee (FOMC) showed that members seem to be as divided as the rest of the country over whether and how to stimulate the economy. Some felt the Fed's recent decision to tweak its bond portfolio was not necessary; others argued for more aggressive measures. Eye on the Week Ahead As earnings season gets into high gear, several bellwether banks and tech companies are scheduled to report. Two key manufacturing surveys and inflation data also will serve as economic indicators. Key dates and data releases: Empire State manufacturing survey, industrial production (10/17); wholesale inflation, international capital flows, housing market (10/18); consumer inflation, housing starts, Fed "beige book" report (10/19); weekly new jobless claims, home resales, Philadelphia Fed survey (10/20). Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. Equities data reflect price change, not total return. The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.