Index Summary
- The major market indices were mixed this week. The Dow Jones Industrial Index rose 1.01 percent. The S&P 500 Stock Index advanced 0.58 percent, while the Nasdaq Composite finished 0.87 percent higher.
- Barra Growth underperformed Barra Value as Barra Value finished 0.87 percent higher while Barra Growth gained 0.28 percent. The Russell 2000 closed the week with a gain of 0.75 percent.
- The Hang Seng Composite finished lower by 1.21 percent; Taiwan was down 0.27 percent and the Kospi advanced 0.69 percent.
- The 10-year Treasury bond yield closed at 3.85 percent, up 20 basis points for the week.
Domestic Equity Market Diary (3/29/2010)
The figure above shows the performance of each sector in the S&P 500 Index for the week. The best-performing sector was consumer discretion, up 2.4 percent. Other better-performing sectors included financials and information technology. Underperforming sectors included energy, utilities, and health care.
Within the telecom services sector the best-performing stock was Lennar Corp, up 13.6 percent. Other better-performing stocks in the sector were Starwood Hotels, and Harman International.
Strengths
- The homebuilding group was a top performing group for the week, up 7 percent, led by Lennar Corp. The company reported a smaller than expected loss in the fourth quarter and expects to be profitable for all of 2010.
- The best performing group was consumer electronics, led by its lone member Harman International. Moody’s changed the outlook of the company to positive from negative. This impacts approximately $232 million of the company’s debt.
- The drug retail group outperformed, rising 6.4 percent, led by CVS Caremark. The company sees their acquisition of Longs Drug stores being accretive to earnings this year by as much as 10 cents per share.
Weaknesses
- Two healthcare related groups were among the worst performers as managed health and biotech produced losses greater than 3.5 percent. Humana Inc. warned that it may have to take charges in 2010 if they lose their Tricare contract in 2011. Genzyme was the worst performing biotech stock on news that the FDA would take enforcement action against the company for a series of manufacturing problems at one their plants.
- The education group declined 3.7 percent, led by Apollo Group. The company will be reporting earnings at the start of next week.
- The independent power producers group underperformed, down over 4 percent, led by NRG Energy. A brokerage firm removed the stock from its conviction buy list.
Opportunities
- There may be an opportunity for gain in M&A (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.
