The Markets

After Alcoa’s strong report unofficially kicked off the Q2 earnings season, domestic equities rebounded from two down days. However, investors decided to take advantage of equities’ recent record levels and take some profits after revelations about a banking problem in Portugal revived concerns about Europe’s financial sector. Meanwhile, the spot price of oil, which had spiked to $107 two weeks ago, ended the week just over $100 a barrel.

Market/Index	2013 Close	Prior Week	As of 7/11	Weekly Change	YTD Change
DJIA	16576.66	17068.26	16943.81	-.73%	2.21%
Nasdaq	4176.59	4485.93	4415.49	-1.57%	5.72%
S&P 500	1848.36	1985.44	1967.57	-0.90%	6.45%
Russell 2000	1163.64	1208.15	1159.93	-3.99%	-.32%
Global Dow	2484.10	2638.59	2599.40	-1.49%	4.64%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.04%	2.65%	2.53%	-12 bps	-51 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

• The Federal Reserve currently expects its bond purchases to end in October, according to minutes of the most recent Federal Open Market Committee meeting. However, the minutes also reiterated that the end of bond-buying won’t automatically mean higher interest rates, at least not for a “considerable time.” The Fed also will continue to reinvest the proceeds of maturing bonds it already holds until after it acts on rates.
• Talks aimed at trying to address U.S.-China differences over Chinese currency policies began. The United States contends that those policies have kept the yuan artificially low, giving Chinese companies an unfair pricing advantage. Meanwhile, Chinese exports were up 7.2% in June from a year earlier, according to China’s General Administration of Customs.
• A major Portuguese lender’s failure to make payments on some of its short-term debt raised concerns once again about the stability of European banks and the possibility of contagion. Banco Espirito Santo has been known to be struggling since December, but investor reaction to the disclosure caused several other European companies to postpone bond offerings.

Eye on the Week Ahead

Q2 earnings reports from some major financial and tech companies, due next week, could influence investor thinking about whether Q1’s discouraging GDP really has given way to renewed growth. Housing and inflation data also are likely to be closely watched.