U.S. Equity Market Diary (November 15, 2010)
The figure below shows the performance of each sector in the S&P 500 Index for the week. The best-performing and only positive sector for the week was energy, which rose 0.95 percent. Financials were the worst performers, followed by technology and industrials.
Within the energy sector, the best-performing stock was Halliburton, up 12 percent. Other top performers were Consol Energy, Range Resources and Cabot Oil & Gas.
Strengths
- The coal group was one of the best-performing groups for the week, up 2.5 percent, led by Consol Energy. The company rose as Chevron agreed to buy Atlas Energy, which helped crystallize the valuation of Consolās Marcellus Shale holdings.
- Priceline.com rose 6.7 percent as the company released earnings this week which surpassed investor expectations.
- Halliburton held a successful analyst day in which investors were encouraged by international growth and rising margins.
Weaknesses
- Dean Foods was the worst performer in the S&P 500 this week, falling by more than 26 percent as the company missed earnings expectations and also guided the fourth quarter below consensus.
- Cisco Systems was the second-worst performer, falling 17 percent as the company cited waning government purchases of its equipment. Cisco said that state government orders fell 48 percent.
- Boeing fell by 11.5 percent as the new Dreamliner suffered another setback when a test flight was forced to make an emergency landing after a fire on board.
Opportunities
- There may be an opportunity for gain in merger and acquisition (M&A) transactions in 2010. Corporate liquidity is high, thereby providing the means to pursue acquisitions.
Threats
- Should investorsā expectations for an improving economy not come to fruition on a reasonable timeframe, 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.
