AdvisorShares Weekly Market Review
Highlights of the Prior week
For the week of September 9 – September 13
The major stock market indexes rose for the second week in a row. The Dow Jones Industrial Average was the best performing index last week (up 3.09%), while the Nasdaq was the worst performer (up only 1.72%). The largest component of the Nasdaq, Apple, fell significantly after releasing two new versions of the iPhone 5, which failed to impress investors. Most of the gains came early in the week, after the Obama administration seemed to have found a diplomatic solution to the chemical weapons problem in Syria. Oil prices fell after reaching a two-year high, as the US appears to have avoided another military confrontation in the Middle East. US wholesale prices rose by a greater than expected 0.3% in August. The price increases seem to be mostly due to rising food and fuel costs, not wage pressures. However, retail sales for August increased by less than expected (0.2%) and the preliminary estimate for consumer sentiment dropped to 76.8.
Yields for US Treasuries fell a little bit after reaching two-year highs the previous week. While there wasn’t much change in prices for US investment-grade corporate debt, there was a lot activity in the space last week. Verizon Communication issued $49 billion in debt to pay Vodafone for its stake in Verizon Wireless. This was by far the largest corporate bond offering in history, with the previous record of $17 billion set by Apple not too long ago. High yield bonds generally rose in price and many new issues of high yield debt were oversubscribed. While municipal bonds funds and still seeing outflows, the market seems to be stabilizing as many investors are now finding the higher yields attractive. Puerto Rico is the biggest cause for concern among municipal investors and some of its bonds’ yields have climbed above 8%. Hope for a peaceful solution to the Syrian crisis caused emerging market debt to trade up for the week. However, as emerging market currencies weaken versus a stronger dollar, returns for US investors have been unimpressive. Turkey’s debt got a big boost after second quarter GDP growth numbers came in at 4.4%. Not only was this higher than expected, it was the highest growth rate since 2011 for an economy many thought was headed for troubles. Argentina also made the news, but in a negative sense, as S&P downgraded its debt from B- to CCC+.
Past performance is not indicative of future results.