The following summaries are part of the weekly Advisor Alert produced by US Global Funds for the week ending December 4, 2009.
Index Summary
- The major market indices were higher this week. The Dow Jones Industrial Index rose 0.77 percent. The S&P 500 Stock Index rose 1.33 percent, while the Nasdaq Composite finished 2.61 percent higher.
- Barra Growth underperformed Barra Value as Barra Value finished 1.91 percent higher while Barra Growth advanced 0.80 percent. The Russell 2000 closed the week with a gain of 4.43 percent.
- The Hang Seng Composite finished higher by 6.92 percent; Taiwan gained 2.14 percent, and the Kospi rose 6.58 percent.
- The 10-year Treasury bond yield closed at 3.48 percent, up 26 basis points for the week.
Domestic Equity Market
For the five trading days thru Thursday the figure above shows the performance of each sector in the S&P 500 index. The best-performing sector was utilities, up 2.6 percent. The other better-performing sectors were telecom services and technology. The worst-performing sectors were energy, financials, and consumer staples.
Within the telecom services sector, the best-performing stock was Integrys Energy Group Inc., up 6.9 percent. Other top-five outperforming stocks in the sector were American Electric Power Co. Inc., Dynegy Inc., Pepco Holdings Inc., and Centerpoint Energy Inc.
Strengths
- The human resources & employment services group was the best-performing group for the week, up 14.9 percent. Robert Half International Inc and Monster Worldwide Inc both rose strongly on Friday in response to the strong jobs report for November.
- Five of the ten best-performing groups were real estate-related (real estate services, diversified REITS, industrial REITS, retail REITS, and office REITS), up in a range from 14.5 percent to 9.7 percent, respectively. Investors appeared to be moving money into real estate-related investments. A major brokerage firm analyst upgraded his rating on the REIT industry to “Neutral” from “Cautious”.
- The forest products group was among the outperformers, rising 12.9 percent on the strength of its single member, Weyerhaeuser Co. The forest products stock was upgraded from “Neutral” to “Buy” in a report by a major brokerage firm. The report cited several catalysts, including a possible REIT conversion, seasonal and weather-related factors, and the stock’s relative underperformance.
Weaknesses
- The diversified metals & mining group was the worst-performing group, falling 4.9 percent. The group’s largest member, Freeport-McMoran Copper & Gold Inc, led the group down by selling off sharply on Friday. The price of gold fell on Friday.
- The home entertainment software group underperformed, down 4.8 percent, led by its single member, Electronic Arts Inc. Software games maker Take-Two Interactive Software Inc. provided lower guidance for its fiscal first quarter and 2010 fiscal year.
- The coal & consumable fuel group underperformed, down 4.1 percent. All three of the group’s members sold off on Friday.
Opportunities
- There may be an opportunity for gain in M&A (merger & acquisition) transactions in 2009 and 2010.
- The strength in the market since March could be an opportunity to eliminate weaker companies in the portfolio and upgrade to companies with better fundamental outlooks.
Threat
- Should investors’ expectations for an improving economy not come to fruition on a reasonable time frame, it could be a threat to stock prices.
