U.S. Equity Market Cheat Sheet (April 11, 2011)
The figure below shows the performance of each sector in the S&P 500 Index for the week. Three sectors increased and seven decreased. The best-performing sector for the week was consumer staples which rose 0.51 percent. Other top-three sectors were materials and healthcare. Industrials was the worst performer, down 1.44 percent. Other bottom-three performers were telecom services and consumer discretion.
Within the consumer staples sector, the best-performing stock was Dean Foods which rose 5.09 percent. Other top-five performers were Constellation Brands, Supervalu, CVS Caremark and Costco Wholesale.
Strengths
- The home furnishings retail group was the best-performing group for the week, up 10 percent, led by its single member, Bed Bath & Beyond. The firm reported quarterly earnings which handily beat the consensus forecast, and it guided earnings for the current fiscal year above the consensus forecast.
- The gold group was the second-best performer, gaining 7 percent on the strength of its single member, Newmont Mining. The price of gold increased during the week.
- The diversified metals & mining group outperformed, increasing by 4 percent. The stock of the group’s largest member, Freeport McMoRan Copper & Gold, increased as the prices of copper and gold increased.
Weaknesses
- The airlines group was the worst-performing group, losing 8 percent on weakness in the group’s single member, Southwest Airlines. Airlines sold off as the price of crude oil rose to a new 12-month high.
- The fertilizers & agricultural chemicals group underperformed, down 8 percent, led by its largest member, Monsanto. The firm reported fiscal second quarter earnings above the consensus estimate, but it reiterated its earnings forecast for the current fiscal year, a level which was below the analyst consensus.
- The motorcycle manufacturers group lost 6 percent, led down by its single member, Harley-Davidson. A major brokerage firm report estimated that Harley-brand U.S. retail sales at the dealer level decreased 6 percent year-over-year during March.
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 investors’ expectations for an improving economy not come to fruition on a reasonable timeframe, it could be a threat to stock prices.
- Quantitative easing currently being implemented by the Federal Reserve might result in unintended consequences.
- The nuclear disaster in Japan creates uncertainly, which is not good for stock prices.
