- The major market indices were higher this week. The Dow Jones Industrial Index (1) rose 0.55 percent. The S&P 500 Stock Index (2) advanced 0.99 percent, while the Nasdaq Composite (3) finished 1.78 percent higher.
- Barra Growth (4) outperformed Barra Value (5) as Barra Value finished 0.97 percent higher while Barra Growth gained 1.01 percent. The Russell 2000 (6) closed the week with a gain of 1.59 percent.
- The Hang Seng Composite (7) finished higher by 2.06 percent; Taiwan (8) was up 1.07 percent and the Kospi (9) advanced 1.72 percent.
- The 10-year Treasury bond yield closed at 3.70 percent, up 1 basis point for the week.
Domestic Equity Market
The figure above shows the performance of each sector in the S&P 500 index for the week. The best-performing sector was telecom services, up 2.5 percent. Other better-performing sectors included financials and technology. Underperforming sectors were utilities, consumer staples, and healthcare.
Within the telecom services sector the best-performing stock was Sprint Nextel Corp., up 9.8 percent. Other better-performing stocks in the sector were Windstream Corp. and MetroPCS Communications Inc.
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Strengths
- The industrial REIT (real estate investment trust) group was the best-performing group for the week, up 9 percent, led by its single member, ProLogis. The company sold $1.5 billion in notes during the week. At a conference in the prior week, ProLogis said that it has observed more demand in the market and noted that market rents are beginning to bottom out.
- The diversified REIT group was the second-best-performer, rising 7 percent. Its single member, Vornado Realty Trust, said at a conference the prior week that it expects to make acquisitions this year that can generate returns for shareholders.
- The regional banks group was among the outperformers, rising 5 percent. This strength likely came from investors anticipating a turn in the credit cycle, with loan losses beginning to diminish during 2010.
Weaknesses
- The agricultural products group was the worst performer, down 6 percent, led by its single member, Archer Daniels Midland Co. (ADM). Officials from the Obama Administration conducted a hearing on competition in agriculture that may shape a new era of antitrust enforcement. Along with ADM, names mentioned in the press that might be affected include Monsanto Co. and Tyson Foods Inc.
- The gas utility group underperformed, falling 3 percent. EQT Corp., a member of the group, priced a public offering of 12.5 million shares at $44 per share.
- The gold group underperformed, declining 3 percent, led by its single member, Newmont Mining Corp. The price of gold declined during the week.
Opportunities
- There may be an opportunity for gain in merger & acquisition transactions in 2010. Corporate liquidity is high, thereby providing the means to pursue acquisitions.
Threats
- Should investors’ expectations for an improving economy not come to fruition on a reasonable time frame, it could be a threat to stock prices.
- As governments around the world begin to wind-down the monetary and fiscal stimulus programs put in place during the economic crisis, it will likely present a headwind for stocks.
