U.S. Equity Market Cheat Sheet (March 7, 2011)
The figure below shows the performance of each sector in the S&P 500 Index for the week. Six sectors increased and four decreased. The best-performing sector for the week was healthcare which rose 2.43 percent. Other top-three sectors were utilities and energy. Financials was the worst performer, down 1.6 percent.Ā Other bottom-three performers were telecom services and technology.
Within the healthcare sector, the best-performing stock was Agilent Technologies Inc which rose 10.36 percent. Other top-five performers were Davita Inc., Waters Corp., Coventry Health Care Inc., and Biogen Idec Inc.
Strengths
- The casinos & gaming group was the best-performing group for the week, up 6 percent on strength in Wynn Resorts, Ltd. Gambling revenue in Macau rose 48 percent in February from a year earlier.
- The coal & consumable fuel group outperformed, rising 5 percent. This was apparently driven by a report that a coal producer may have agreed to a record $330 per metric ton hard coking coal price for the April-June quarter, a price that was apparently above market expectations.
- Four of the top ten best-performing groups (life science tools, managed healthcare, healthcare technology, and pharmaceuticals) were in the healthcare sector. These four groups were up in a range of 2 to 5 percent.
Weaknesses
- The thrifts & mortgage finance was the worst-performer, down 9 percent on weakness in Hudson City Bancorp. The company said that it expected to receive a memorandum of understanding from the federal Office of Thrift Supervision that may require it to reduce its level of interest-rate risk and funding concentration.
- The special consumer services group lost 5 percent, led down by its single member, H&R Block Inc. A Barronās online article this week stated that options investors are building bearish options positions that would increase in value if shares of H&R Block sold off in response to a March 9 earning report and the tax-season updates on April 7 and April 25.
- The hotels group was down 4 percent. Group member Carnival Corp. sold off after a regulatory filing showed that the cruise line operatorās chief operating officer sold 180,000 shares.
Opportunities
- There may be an opportunity for gain in merger & acquisition (M&A) transactions in 2011. 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 time frame, it could be a threat to stock prices.
- Quantitative easing currently being implemented by the Federal Reserve might result in unintended consequences.
