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MARKE T

INSIGHTS

Weekly Market Recap

February 6, 2012

Headlines

• Th e Se nat e ap prov ed a bi l l ban nin g insid er t rad ing b y Co ng re ss.

Economic News

• Pers on al i n come ros e mor e th an e xp ect ed .

• Bo th I SM surve y s con ti nu e t o ind i cate exp an si on .

• Jo bl e ss clai ms fel l to 36 7,000.

• Un emp loy me nt Rat e: 8 .3%; Pri v ate P ayro ll s: +2 5 7K.

• Ne xt W ee k: I nt ern atio nal T rade, Con su me r Sent iment .

Thought of the Week

In i ti al s urv ey repo rts f or 2012 sh ow th at th e U .S. man u factu ring se cto r exp an de d fo r th e 30th

con se cut iv e mo nt h i n J anu ary and th e d own turn in Eu roz on e man ufa ctu ri ng may be ea sin g . Manufact uri n g ou tsi de th e U .S. slo wed mat eri al l y t oward th e end of

201 1, but as th e effe cts o f i nv en tory adj us tmen ts an d

fl oo di n g in T hail an d fad e, gl o bal manu fac tur in g h as

pi cke d b ack up , expan d in g f or th e s eco nd co nse cu ti ve mo nt h i n J an uar y. W eakn e ss in Euro pean f i nal sales wil l

li ke l y co nt in ue to be a d rag on the regi on's ou tpu t, b ut

the res il i e ncy se en el se whe re ar ound the wo rld, an d th e U.S. in par ti cul ar, b o de wel l for c on tinu ed glo bal

eco nomi c gro wth i n the ye ar ah ea d.

Question of the week:

Th e J anu ary emp l oymen t re po rt sh owe d th at the re we re 12.8 mi l l io n u n emp lo yed pe op l e; when was th e l ast time the numbe r of un emp loyed peop le was th is low?

Prior week's question:

Last we e k, th e Fede ral Re serve pu b lish ed an i n fl ati on targ et f or th e f ir st time; what i s th e Fe d’s t arg et PC E in fl atio n l ev e l?

Answer to prior week's question:

Th e Fe d’ s target PC E in flatio n l ev el is 2% y ear -ov er- ye ar; wh il e a 2% targ et h as l ong b e en assu me d , the FOMC ha s f i nal l y p ro vi ded a s pecifi c targ et r ate t o h el p gu ide t he dire ctio n o f mon etar y p oli cy.

Ple ase see i mp ortan t discl o su re o n n ext p ag e.

 

Fr iday

Pr ior

Y

ear

Y

ear

Clo se

Week

En d 12/3 0/1 1

Ag o

Index Lev els

2/ 3/12

1/2 7/12

2/3/1 1

Dow J on es 30

12 ,8 62

12 ,660

1 2, 21 8

1 2 ,062

S&P 500

1, 345

1, 316

1, 25 8

 

1 ,307

Na sdaq

2 ,906

2 ,8 17

2 ,605

 

2, 754

Ru sse ll 2 000

8 31

799

741

799

Bo nd Rates

 

Fed Fun ds T arg et

0.25

0.2 5

0.2 5

0.2 5

2 Ye ar Tre asu ry

0.24

0.2 2

0.24

0.70

10

Ye ar Tr easu ry

1 .95

1 .90

1 .87

3 .54

10

Ye ar Mun i ci pal

2 .26

2 .30

2 .45

3.97

Hig h Yi e l d

7.39

7 .50

8.36

6.94

 

1 w eek

 

Y TD

Mar ket Ret ur ns

L o cal

U SD

L o cal

 

U SD

S&P 500

2 .2 2

2 .2 2

7.1 1

7.1 1

MSCI - EAFE

1 .87

2. 27

6.69

8.38

Un it ed Ki n gd om

2 .89

3.76

5 .8 5

7. 61

Eu rop e e x-U K

3.1 5

3.1 8

8.39

9.83

Jap an

-0.1 1

0.08

4 .35

4.83

Asia e x-J ap an

0.92

1 .70

8.65

1 2. 10

 

Fr iday

Pr ior

Y

ear

Y

ear

Clo se

Week

En d 12/3 0/1 1

Ag o

Con sumer Rate s

2/ 3/12

1/2 7/12

2/3/1 1

6 Mo nt h C D

0.56

0. 57

0.64

 

0.39

30 Ye ar Mo rtg age

4.09

4.1 1

4.07

 

4.8 1

Pri me Rat e

3.2 5

3.2 5

3.2 5

 

3.2 5

Commodi ti es

Go ld

1 751 .00

172 7.00

1 531 .00

1 32 8.00

Cru de Oi l

9 7.84

99 .56

98.83

 

9 0.54

Gasol in e

3.44

3.39

3 .26

 

3. 10

Cur re nc y

$ p e r €

1. 31

1. 31

1 .30

 

1 .36

$ p e r £

1 .5 8

1. 57

1 .5 5

1. 61

¥ pe r $

76 .59

76.74

76.94

 

81 .8 2

 

Wtd Avg

Index Char ac terist ic s

P/E For wa rd

 

P/E

D

ividen d

M

kt Cap

T

r aili ng

Yi eld

(bill io ns)

S&P 5 00

12 .8 1

1 5 .26

2.09

 

98.73

Ru sse ll 1 000 V alu e

1 1 .87

1 3.33

2.64

 

7 4.50

Ru sse ll 1 000 G ro wth

1 4.48

1 5.90

1 .62

1 00.90

Ru sse ll 2 000

1 9.46

23 .02

1 .46

 

1 .34

S&P 500 Sector Returns 6 4 2 0 15 10 5 0 -5 13.4Financials 4.3Financials
S&P 500 Sector Returns
6
4
2
0
15
10
5
0
-5
13.4Financials
4.3Financials
Materials
13.3
Technology
3.2
Technology
10.5
Telecom
2.4
Industrials
9.9
Materials
2.0
Consumer
8.3
Industrials
2.0
Discr.
Consumer
Health Care
4.4
2.0
Discr.
Energy
4.3
Energy
1.5
Consumer
-0.1
Health Care
1.1
Staples
Consumer
-1.2
Telecom
0.9
Staples
-3.2
Utilities
Utilities
0.4
S&P 500
7.1
S&P 500
2.2
1 weekYTD

Style Returns

V B G L 2.3 2.2 2.4 M 2.4 2.6 2.8 S 4.0 4.1 4.1
V B
G
L
2.3
2.2
2.4
M
2.4
2.6
2.8
S
4.0
4.1
4.1
1 week
V B G L 6.7 7.1 8.6 M 8.2 9.5 10.8 S 11.7 12.2 12.8
V B
G
L
6.7
7.1
8.6
M
8.2
9.5
10.8
S
11.7
12.2
12.8
YTD

No te : All r etu rn s re pre se nt t otal re tu rn i n clud in g d i vi d end s.

Chart of the Week

Manufacturing Has Gotten Off to a Decent Start in 2012

Eurozone and Global Manufacturing PMIs, ISM Manufacturing index 65 60 55 50 45 40 U.S.
Eurozone and Global Manufacturing PMIs, ISM Manufacturing index
65
60
55
50
45
40
U.S. ISM Mfg Idx
Global Mfg PMI
35
Eurozone Mfg PMI
30
' 0 5
' 06
' 07
' 0 8
' 09
' 10
' 1 1
' 1 2
Mfg PMI 35 Eurozone Mfg PMI 30 ' 0 5 ' 06 ' 07 ' 0

MARKET

INSIGHTS

Weekly Market Recap | February 6, 2012

Chart of th e Wee k: Sou rce : Marki t, ISM, J .P. Mo rg an Ass et Man ag eme nt.

Though t of t he We ek: So urce : Markit, I SM, J .P. Mo rgan Asset Manag e me n t.

Qu es ti on of the Week : So ur ce: F ed er al R es erve , J. P. Morg an Asset Man ageme nt .

Mar ket R e tur ns: Al l da ta rep re sents t otal return i ncludi ng t he rei nve stme nt of d i vi d ends for sta ted pe ri od. In de x: MSC I – EAFE; prov id e d b y: MSC I – g ro ss of fi cial p ricin g. I n de x: UK; p rov i de d b y : MSCI – gr oss offi ci al pri ci n g. I n de x: E urop e e x-UK ; prov ided b y: MSCI – gro ss offi ci al pri ci n g. In de x: J ap an; pro vi ded by : MSC I – gro ss o ffi ci al pri cin g. I n de x: Asi a ex-J apan ; p rovi ded b y : MSCI – gr oss offi ci al pr ici n g. In de x: S&P 5 00 In d ex; pro vid ed by: I DC.

(MSC I EAFE i s a Morgan Stan ley Capi tal In ternati on al In d ex th at is desi gn ed to me asu re t he pe rforman ce of the de ve l op e d stock marke ts o f Eu ro pe, Austral i a, an d th e Far E ast ).

Dow J on es- UBS Co mmod it y I nd e x (DJ -U BSC I ) i s a b roadl y d i versi fied i nd e x c omp ose d o f fu tu res co ntract s on p h ysi cal commod it ie s. T he index i s d esi g ne d t o mini mi ze co nc en trat io n i n any on e commod i ty o r sec tor . It i n cl ud es 19 commodi ty futu res in f i ve gro up s.

Bo nd Rates: Fe d Fun ds T arget, EcoWi n; 2 Year Tr easury , I DC; 1 0 Year Tre asury , I DC; 1 0 Yea r Mu n i, Barcl ays Cap i tal ; Hi gh Yie ld, Barcl ays C apital High -yi eld In de x.

Co nsu mer R ate s: 6 Mon th CD, Fe deral R ese rv e; 3 0 Year Mo rtg age, Mor tga ge Ban ker s Associ ati on (MBA) ; Pri me Rat e: Fe d era l R ese rv e.

Co mmo dit ie s: G ol d , Ec oWi n; C rud e Oi l (WTI ) , E coWin; G aso lin e, E co Wi n.

Cu rre ncy: Do ll ar p e r Pou nd , IDC; Do ll ar pe r Eu ro, I DC; Yen p e r Dol l ar, I DC.

In de x Pri ce Le ve l s: R efl ects cl o sing price lev el for eac h i nd ex a s o f sta ted dat e. Do w Jo n es I n du stri al 30

(T he Dow J one s is a p rice -wei g ht ed i n de x composing of 30 wi de l y- trad ed blu e chi p stocks. ): IDC , S&P 5 00

In de x ( The S&P 5 00 In dex is widel y rega rde d as t he b est sing l e g aug e of th e U.S. equ i ti es mar ket, thi s worl d -re no wne d i nde x i ncl ude s a rep rese ntat ive sampl e of 5 00 l ead ing co mpa ni e s i n le ad ing i n du str ie s o f the U. S. econ omy . Altho u gh t he S&P 500 focu ses o n t he l ar ge -cap seg men t o f the marke t, wi th app ro ximat el y 7 5% cov e rag e o f U.S . eq uiti e s, i t i s al so an id eal p ro xy fo r th e to tal marke t.) : I DC , NASDAQ Co mpo site I nde x (Th e NASDAQ I nd ex i s a marke t-val ue weig ht ed ind ex o f al l common sto cks l is ted on the NA SDAQ s toc k e xch an ge .) : I DC, R us sel l 2000 I nde x: I DC. I ndexes are n ot avai lable fo r di re ct i nv e stmen t.

S&P I n de x Ch arac ter is tics: T rai l in g P/ E p ri ce i s p ro vi d ed by Factse t Pri ci n g da taba se whil e trai l i ng earn i ngs is p rovi ded by Compu stat. Div i den d Yiel d provid ed by FactS et Pri cin g datab ase . Fwd. P/ E i s a bot tom-u p we i gh te d Har mo ni c av e rage us ing Firs t Cal l Mean est imat es fo r th e " Ne xt 12 Mon th s" (NT M) p eri od. Mar ket cap i s a bott om-u p we ig h ted av erag e b ase d o n sh are in fo rmati o n from Compu stat an d Pr ic e in fo rmati on fro m FactSe t's Pr ici ng d atab ase a s prov id ed by Standa rd & Po or' s.

Ru sse ll 1 000 V alu e I n de x, Russ el l 1000 G rowt h I nd ex, and Ru ssel l 2 000 Ind ex C har acte ri sti cs: T rai li ng P/E is p rovi ded di re ctl y b y Rus sel l . Fwd . P/ E i s a bottom-up weig ht ed harmo ni c av er age usi n g Fi rst C all Me an estimate s for the " Next 12 Months " ( NTM) p eri od. Mar ketc ap is a bo tto m-up we ig hted ave rag e b ase d o n shar e i nf ormat io n f rom C omp usta t and Pri ce in for mati on from Fac tSe t's Pri ci ng d atab ase as p ro vi d ed by Ru sse ll .

Sect or Ret urn s: Se cto rs are base d o n t he GI CS Cl assi fi cati on mo del . Re tu rn d ata are calculat ed by FactSe t usi n g const it ue nt s and wei g hts a s p ro vi d ed by Stan dar d & Poo r’ s. Re turn s a re cumul ati v e to tal re tu rn fo r state d p er io d , incl u di ng rein vest me n t of d ivi d en ds .

Styl e Re tu rns : Sty le box re tur ns b ase d on Ru ssel l I n dexe s wit h the e xce pti on of th e L arge -Cap B lend b ox, wh ich r efl e cts th e S&P 5 00 I nd ex. Al l v alue s are cu mul at ive t otal re tu rn f or sta ted pe ri o d i ncl udi n g the

NOT FDIC I NSUR ED | NO B ANK GUAR ANTE E | MAY L OSE VAL UE

rein ve stme nt of d ivi de n ds. T h e Ind ex u sed fr om L to R, t op to bot tom are : S&P 5 00 In de x ( Ind ex repr ese nts the 500 L arge C ap p ort io n o f th e st ock mark et, a nd is compr is ed of 500 sto cks as se le cted b y t he S&P Inde x C ommi tte e) , R uss el l 1000 Valu e I nd e x ( Me asu res t he perfo rmanc e o f tho se Ru ssell 1 000 comp ani es wi th l owe r pr ice -t o-b o ok rat io s and l owe r fo rec aste d g rowt h value s), Ru sse ll 1 000 Gro wth Ind ex ( Meas ures

the pe rforman ce o f th ose Ru sse l l 1 000 comp an ie s wi th h igh er p ri ce -to -b ook rati o s a nd high e r for eca ste d growth v alu es) , R uss el l Mid Cap Value Inde x (Meas ure s th e p erf ormance of tho se Russe l l Mi d Cap companie s wit h l owe r p ri ce- to- bo ok rat i os an d lower fore caste d g rowth val ues) , Ru sse ll Mi d Cap In de x

(T he Ru sse l l Mi dcap Inde x in cl ud es the smallest 8 00 sec uri ti e s in the R uss el l 1000), Rus sel l Mid Cap

Growth In de x ( Me asu re s the pe rfo rman ce o f those Ru sse ll Mi d C ap c ompanie s wit h h ig he r pri ce- to- bo ok ratios and h i gh er for ecas ted gr owth val u es ), Ru ssell 2000 Valu e I nde x (Me asu re s t he pe rfo rman ce o f tho se R u ssell 20 00 c ompanie s wi t h l owe r pr ic e-t o-bo ok rat ios an d l owe r fo recasted g rowt h v alue s), Ru sse ll 2000 I nde x (The R uss el l 2000 i nc lu d es the s mall e st 200 0 s ecuri ti es i n the Ru ssel l 3000) , R us sel l 2000 G rowth Ind ex ( Me asur es th e p erfo rmance of t ho se R us sel l 2000 co mpa ni es wi th hi g he r p ri ce-t o- book rat io s and h ig h er fore caste d g rowth v al ue s) .

Con tact J PMo rga n Distri but ion Serv ice s, Inc. at 1-8 00-480-4111 for a fund pr ospect us. You can also v isi t us a t ww w. j pmorga nf unds.com. In ve st ors should ca refu lly c onsi der t he inve stme nt obj ec tiv e s an d risk s as we ll a s ch arg es a nd e xpe n ses of t he mutua l fun d be fore inv esti ng . T he prospec tus con t ain s this a nd ot her informa ti on a bout the mut ual fund. Re a d t he prospe ct us carefull y b efor e in vest ing .

Past performance does not g ua ran t ee futur e re sult s.

Di ve rsif ica tio n doe s not gua rant ee inv e stme nt re turn s and does not eli mi na te t he r isk of l oss.

Op i ni o ns an d e sti mate s o ffe red co nsti t ute ou r j ud gme nt a nd are su bje ct to cha ng e wi th ou t noti ce, as are state men ts of fi nanci al ma rket tre nds, whi ch are b ase d o n cu rre nt mar ket c on di ti o ns. We bel i eve th e in fo rmati on pr ov i ded h er e i s rel i ab l e, b ut d o no t wa rrant it s accu racy or comple teness. Thi s mate ri al i s not in tended as an offe r o r soli ci tati o n for th e pur chas e o r sal e o f any finan ci al in str ume nt. The v iews and strate g ie s d escr ib e d may n ot be suitabl e fo r al l i nve sto rs. Th is mat eri al ha s be en pre p are d fo r in fo rmati on al pu rp ose s onl y , and is n ot in tend ed to prov id e, and sho u ld no t be re lie d on fo r, acc ou nt in g , le ga l or tax advi ce . Refere nce s to fut ure re tur ns are no t p romi se s or e ven est imate s o f actu al r etu rns a clie nt p o rtfol io may ach i eve . Any fo rec asts co nt ain ed here i n are for illu strat ive p ur po ses on ly an d are no t to b e re lie d u p on as adv i ce or i nte rp re ted as a re comme nd ati on.

Th e price o f eq u it y se cur it i es may r is e, or fal l be cau se of ch ang es in t he broad mar ket or ch ange s i n a company's fi n an cia l cond i ti on , so met ime s rap id l y o r un pred i ctab l y. In ter nat ion al i n ve stin g i nvo lve s a gre ate r de g ree of r is k a nd i n cre ase d v ol ati li ty . I nv est ments in commod it i es may h av e g re ater vo la tili ty than i nv es tmen ts i n tr adi ti o nal secur it ie s, parti cu l arly i f th e i n stru men ts i nvolv e le v erage .

J. P. Morg an As set Man ageme nt i s th e marke tin g name for the asse t manage ment bu si n ess es of JPMo rg an Ch ase & C o. T hose bu si ne sse s i ncl u de , but are not l i mi t ed t o, J.P. Mo rg an Investme nt Manageme nt I n c., Secu ri ty Cap i tal Re sea rch & Man agement Inco rpor ated and J .P. Mo rgan Alter nat iv e As set Manageme nt, Inc.

JPMo rg an Di stri b ut ion Serv i ces , In c., me mbe r FI NRA/ SI PC

© JP Mo rgan Cha se & Co., Fe b rua ry 2 012 .

Un le ss o the rwi se state d, all d ata i s as of Fe bruar y 3, 2012 or as of mo st recentl y a vai l ab le .

ry 2 012 . Un le ss o the rwi se state d, all d ata