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Market Update

Morningstar Weekend Market Overview

February 23-27, 2009.

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U.S. equity markets were down this week as investors grappled with ongoing economic concerns, U.S. budget deficit worries, and financial services sector health.

The Morningstar U.S. Market Index was down for the week as investors digested President Obama's budget details ( ),  Citigroup's (C) new relationship with the government ( ), and restated GDP data that painted a bleaker picture of the economy.

There were some pockets of strength midweek in the financial services sector thanks to rallies in the stock prices of  J.P. Morgan (JPM),  Wells Fargo (WFC),  Bank of America (BAC), and others. Citigroup's large ownership transfer to the government and  GE's (GE) 68% dividend cut ( ) on Friday cast a dark shadow, however, and many bank stocks gave back their gains for the week. Ongoing consumer spending weakness contributed to large stock price declines for firms such as  RadioShack (RSH),  Office Depot  (ODP), and  Nelnet (NNI).

The Morningstar Core Bond Index was down for the week as corporate credit concerns weighed on bond prices. Year to date, the Morningstar Long-Term Corp Bond Index is down over 4% with half of that decline occurring this week. Emerging-markets corporate bonds were also significantly impacted this week by the global economic slowdown. The Morningstar Emerging Markets Corporate Index was down nearly 3% for the week, bringing the year-to-date loss to 26%.

In a bright spot, the Morningstar Long-Only Commodity Index was up nearly 3% for the week due to price increases for oil, gasoline, and copper. Gold and silver prices eased a bit off their historically high levels. Agricultural commodities were mixed for the week; sugar, corn, and soybeans were up modestly while cotton, wheat, and soybean meal were down slightly on average.

 Bond Index One-Week Returns

 

1 Wk
Return (%)

Yield Duration
Core Bond -0.42 3.79 4.08
US Government Bond -0.35 2.17 5.02
Corporate Bond -1.46 7.01 5.72
Mortgage Bond 0.03 3.75 2.48

 
 Commodity Index One-Week Returns
  1-Week Return % YTD Return %
Long-Only Commodity 2.81 -6.85
Long/Flat Commodity -0.33 -0.33
Long/Short Commodity -0.79 0.57

For more information, call +1 312 384-3735. Daily updates and historical values are available at http://indexes.morningstar.com

Rod Bare does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.