The S&P 500 last week suffered its worst weekly loss, and its first consecutive weekly decline of the year, amid concerns of slowing global growth and lingering debt problems in Europe. Yet despite these concerns, and comparisons to the trading pattern of the past two years when stocks started strong only to fade under the weight of similar worries, so far the pullback in equities has been quite modest. The index lost 2.0 percent last week, but resides just 3.4 percent off its April 2 peak. And so far, support has held at the 65 day moving average, currently at 1360. So, while stocks have churned sideways over the past six weeks unable to extend their gains from January and February, the damage has been limited.

Last week, China reported that its economy expanded at a year-over-year rate of 8.1 percent in the first quarter. Depending on your point of view, the report was either just strong enough to reinforce expectations of a soft landing for the economy, or weak enough to keep alive the fear of a hard landing. On the plus side, growth at that pace, if maintained, would deliver exactly the kind of moderation that policymakers are hoping to achieve. On the other hand, the rate of decline from the prior quarter, when year-over-year growth was 8.9 percent, was steep enough to perpetuate concerns that evidence of a hard landing is just around the corner. In other words, the report was inconclusive enough to keep the China growth question on the minds of investors.

Global equity markets sold off on Friday following the China GDP report. The MSCI All Country World index fell more than 1.0 percent. Yet, despite the ambiguity of the China report, Friday's decline was attributable to a far greater extent to intensifying concerns regarding Europe. In fact, stocks in Asia closed their Friday session higher after the China report and before weakness appeared in European trading. In Japan, the Nikkei index rose 1.2 percent on Friday, in Hong Kong the Hang Seng rose 1.8 percent, and in Australia the ASX 200 climbed 1.0 percent. Even the Shanghai Composite Index rose 0.4 percent. Not until Europe opened did the day's weakness begin to emerge. When it was over, the Euro Stoxx 50 had plunged by 2.6 percent and the S&P 500 had fallen by 1.2 percent.

The focus in Europe is now squarely on Spain. Despite official reassurances, bond investors are pressing their concern that the country's debt burden is simply too large and its economy too weak to avoid joining Greece, Portugal, and Ireland in needing a bailout. On Friday, those concerns intensified after it was reported that Spanish banks had increased their borrowing from the European Central Bank by fifty percent in March from February, using much of the proceeds to buy Spanish sovereign debt. This reliance on the central bank raises questions about Spanish bank access to private funding markets, as well as the interdependence of the government and its banking system. The yield on the Spanish ten-year note surged higher by 16 basis points on Friday, to 5.96 percent, a level it had first reached on Tuesday after the government announced additional budget cuts and raised concerns about the capital adequacy of the banking system. This yield has been rising steadily since the first week in March when it stood at 4.85 percent. A similar move in the weeks ahead would push that yield dangerously close to the 7.0 percent level that is widely considered unsustainable. In early trading this week, the yield stands at 6.06 percent. Italian bond yields have been rising at the same time. The ten-year note yield rose 12 basis points on Friday to 5.51 percent. In early March it was 4.79 percent.

In contrast to the relatively mild correction so far in U.S. equity markets, the same cannot be said for Europe. The Euro Stoxx 50 index fell 4.2 percent last week for its fourth consecutive weekly decline during which it has fallen more than 12 percent. Calls for less austerity and more growth-oriented policies are rising, as are European pleas for more assistance from nations beyond the European Union in the form of additional funds for the International Monetary Fund. So far, the U.S. has resisted such calls.

So, while it might be stretching the point to say that this year is unfolding in eerily similar fashion to last year, there is no denying the fact that the European debt crisis has not gone away. And at least in that regard, this does look familiar.

It is a busy week for the economic calendar in the U.S., where questions have also been raised recently about the pace of growth, especially following the soft March jobs report and somewhat higher weekly jobless claims. Retail sales for March have already been reported as stronger than expected. Later in the week we get reports on housing starts and building permits, industrial production, existing home sales, and leading indicators. Not until April 27 will we learn the first estimate of first quarter GDP growth in the U.S. Consensus estimates are clustered around the 2.3 percent level, but recent data showing a narrowing of the trade deficit has caused some to revise their forecasts upward to the 3.0 percent level. And earnings season, which is off to a good start, continues with scheduled reports from Citigroup, Intel, Johnson & Johnson, IBM, Coca Cola, Goldman Sachs, Qualcomm, American Express, Microsoft, Bank of America, General electric, and McDonald's among the headliners.

Important Disclosures:

The views expressed are as of the date given, may change as market or other conditions change, and may differ from views expressed by other Ameriprise Financial associates or affiliates. Actual investments or investment decisions made by Ameriprise Financial and its affiliates, whether for its own account or on behalf of clients, will not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not account for individual investor circumstances. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon, and risk tolerance.

The S&P 500 is an index containing the stocks of 500 large-cap corporations, most of which are American. The index is the most notable of the many indices owned and maintained by Standard & Poor's, a division of McGraw-Hill.

MSCI-All Country World Ex. U.S. Index: Is an unmanaged index representing 48 developed and emerging markets around the world that collectively comprise virtually all of the foreign equity stock markets.

The Nikkei index is a price-weighted average of 225 stocks of the first section of the Tokyo Stock Exchange.

The Hang Seng Index is a market capitalization-weighted index of 40 of the largest companies that trade on the Hong Kong Exchange.

The S&P/ASX 200 Index, the benchmark stock index for the Australian markets, is composed of the S&P ASX 100 Index plus another 100 stocks

The Shanghai Composite Index is a capitalization-weighted index of all stocks on China's Shanghai Stock Exchange.

The Euro Stoxx 50 Index is a market capitalization-weighted stock index of 50 large, blue-chip European companies operating within Eurozone nations.

It is not possible to invest directly in an index.

Investment products are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution and involve investment risks including possible loss of principal and fluctuation in value.

Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.

distributed by