A rally in domestic equities in response to Wednesday's Fed announcement of plans to keep interest rates low couldn't be sustained through the rest of the week. The Nasdaq and small-cap Russell 2000 saw the bulk of the week's gains, demonstrating resilience in the face of uncertainty about Greece's talks with its bondholders. The Fed's announcement pushed intermediate-term Treasury yields down but had little effect on longer maturities.

*Equities data reflect price changes, not total return.

Last Week's Headlines

·         The exception becomes the rule: The Federal Reserve's Open Market Committee announced that interest rates will remain at today's exceptionally low levels longer than previously expected. Saying economic expansion continues to be moderate, the Fed forecast low rates will last through at least late 2014.

·         Greece continued to negotiate with its private bondholders over a planned writedown on its sovereign debt. The sticking point is reportedly the interest rate on the bonds that will be exchanged for existing bonds. Meanwhile, leaders attending the Davos World Economic Forum said that despite economic uncertainty, they believe the European debt crisis has begun to come under control.

·         The U.S. economy grew 2.8% in the final quarter of 2011. The initial estimate of gross domestic product is higher than the third quarter's 1.8% GDP, but according to the Bureau of Labor Statistics, higher inventory levels were a major factor.

·         Sales of new homes fell sharply in December, according to the Commerce Department. The 2.2% monthly decline put sales 7.7% below December 2010, and the 302,000 homes sold in all of 2011 was 6.2% below 2010's total.

·         Demand for transportation-related equipment helped produce a 1.8% increase in new orders from manufacturers in November. The Commerce Department said the strongest increase came in durable goods designed to last at least three years, which saw a 3.7% increase in orders. Even excluding transportation, new durable goods orders were up 0.3%, and non-defense-related orders other than aircraft were up 1.8%.

·         The International Monetary Fund cut its forecast for 2012 global growth to 3.3%, slightly lower than 2011's 3.8%. Rising interest rates on European sovereign debt and bank deleveraging could bring on a mild recession there, the IMF said, but it also warned that overly aggressive austerity programs could choke off growth.

·         The Conference Board's index of leading economic indicators rose 0.4% in December to 94.3. The organization said the reading would have been stronger except that the index included for the first time a measure of credit conditions, which was negative and helped moderate positive contributions from 7 of the index's 10 indicators.