AUGUST 29, 2011

WeeklyMarket e Updat
G e neral M arket News
ederal Reserve Chairman Ben Bernankes F speech in Jackson Hole, Wyoming, on Friday was largely a nonevent, as he provided no new information or outlook. reasuries were flat last week, for the most part, T even after Bernankes speech. he 10-year Treasury was up as high as 2.30 T percent last Wednesday, before falling back down to 2.175 percent later in the week. Early Friday morning, the 2-year Treasury stood at 0.195 percent, while the long bond was at 3.54 percent. omestic equity markets staged a healthy gain, D with the S&P 500 rising 4.77 percent. Many market commentators said these gains were a sign that the markets were anticipating another round of quantitative easing, but the lack of a selloff after Bernankes rather tame speech suggests that other factors were at play. rom a technical standpoint, a floor on F the S&P 500 appears to be in place at the 1,1181,122 range. This level has been tested several times in the last few weeks. arrisburg, Pennsylvania, will likely miss H its September 15 payments on $3.3 million in general obligation debt, as its council members failed to approve a full rescue plan. The debt had been insured by AMBAC; however, the monoline insurer filed for bankruptcy last November and is not likely to cover the payments. ields on Greek debt have reached new record Y highs since the inception of the euro, as Finland demanded collateral for its loans to the country, a position that could cause the second bailout package to fall apart. nternational equity markets have continued I to lag domestic indices. Lingering concerns over European sovereign debt and the potential for a global economic slowdown have plagued the MSCI EAFE and MSCI Emerging Markets indices.

M a rket Index Per formance Data

EQUITIES
Index Week-to-Date % Month-to-Date % Year-to-Date % 12-Month %

S&P 500 Index Nasdaq Composite Dow Jones Industrial Average MSCI EAFE MSCI Emerging Markets Russell 2000

4.77% 5.91% 4.36% 0.81% 0.34% 6.16%

8.74% 9.91% 6.73% 12.97% 14.24% 13.12%

5.21% 5.94% 0.81% 9.76% 13.87% 11.07%

14.64% 18.29% 16.04% 6.14% 3.20% 16.74%

page 1 of 2

Week ly Market Update

AUGUST 29, 2011

M a rke t I n d ex Pe r fo rm a n ce Dat a (continued)

FIXED INCOME
Index Month-to-Date (MTD) % Year-to-Date (YTD) % 12-Month %

U.S. Aggregate U.S. Treasury U.S. Mortgage-Backed Securities Municipal Bond U.S. Treasury: U.S. TIPS

1.40% 2.92% 1.13% 1.68% 1.18%

5.81% 7.13% 5.00% 7.25% 11.25%

4.59% 4.46% 4.99% 2.67% 11.37%

What to Lo ok For ward to

Regional manufacturing data has been extremely discouraging, leading some commentators to expect continued slowor even negativegrowth in the second half of the year. But the jury on nationwide manufacturing will be out until Thursdays ISM Manufacturing print. Economists anticipate a contraction in the index from 50.9 to 48.5, which the markets may interpret as a sign that growth is turning negative. We expect markets to be responsive to any large deviation from consensus estimates. Investors may be tempted to react to the ADP Employment Change indicator scheduled for release Wednesday. The ADP numbers have differed substantially from the Bureau of Labor Statistics payroll data in recent months, however, so we would advise caution when using this data source. After a relatively strong showing of 117,000 new jobs in July, analysts believe Nonfarm Payrolls may have risen by a more moderate 85,000 jobs in August. Part of this step back might be attributable to a decrease in government jobs, due to state and federal government cuts in spending. The Unemployment Rate is anticipated to remain elevated at 9.1 percent.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poors. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Barclays Capital Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasurys daily yield curve. The Barclays Capital Mortgage-Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Barclays Capital Municipal Bond Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. The Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index measures the performance of intermediate (1- to 10-year) U.S. TIPS. Rev. 8/11. Authored by the Investment Research team at Commonwealth Financial Network. Commonwealth Financial Network

page 2 of 2