U.S. Equity Market Radar (February 13, 2012)

U.S. Equity Market Radar (February 13, 2012)

The S&P 500 Index ended with a weekly loss for the first time this year. Technology, consumer staples and consumer discretionary sectors were the best performers, while materials, financials and health care were the laggards.

How Financial Crises an dPolicy Responses Affect Equity Risk

Strengths

  • The technology sector had a strong week, as Apple rose 7 percent as the company is expected to release the new iPad3 in early March. Apple is the largest company in world based on market capitalization at $460 billion and is the largest weight in the S&P 500.
  • Elsewhere in the S&P 500 Technology sector, Computer Science, Akamai Technologies and JDS Uniphase all jumped more than 12 percent this week.
  • In the consumer areas, tobacco stocks were very strong as Lorillard rose nearly 10 percent for the week and Philip Morris International rose 5 percent. Both companies reported earnings this week and reported solid pricing power.

Weaknesses

  • The materials sector lost more than 2 percent this week with broad-based weakness across the sector.
  • Financials fell by more than one percent as concerns began building again regarding the Greek bailout.
  • Among the worst performers in the S&P 500 this week were TripAdvisor, Joy Global and Western Union, all falling by more than 10 percent.

Opportunities

  • Earnings results have been encouraging so far and the market has responded, and while we have passed the peak, we still have another week of numerous earnings announcements.

Threats

  • The year began with five weeks of gains in equities and the market suffered its first minor setback this week. After such a strong start to the year, a pullback or consolidation in the market would not be surprising.
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