U.S. Equity Market Cheat Sheet (June 13, 2011)
The figure below shows the performance of each sector in the S&P 500 Index for the week. All ten sectors declined. The best-performing sector for the week was utilities which declined 0.74 percent. Other top-performing sectors were healthcare and consumer staples. Information technology was the worst performer, down 3.25 percent. Other bottom performers were financials and consumer discretions.
Strengths
- The paper packaging group was the best-performing group for the week, up 5.2 percent, driven by increases in both of its members (Bemis Co., Inc. and Sealed Air Corp.). Sealed Air Corp. gained after suffering a sharp decline last week from its announcement that it had agreed to buy Diversey Holdings Inc. Bemis Co., Inc. announced this week that its tender offer to acquire shares of its Brazilian subsidiary, Dixie Toga, had been approved.
- The home furnishing group was the second-best performer, up 2.5 percent, led by its single member, Bed Bath & Beyond on rumors of renewed leveraged buyout (LBO) chatter.
- The distiller and vintners group outperformed, rising 0.75 percent on the strength of its member, Brown-Forman. The stock gained after it reported a 26-cent-per share gain from the sale of its Fetzer vineyards to a Chilean wine producer for $238 million.
Weaknesses
- The building products group was the worst-performing group, down 11 percent. The Case-Shiller home price index, released last week, which showed home prices were entering a double dip, could be a possible reason for Masco Corpās decline.
- The homebuilding group was the second worst-performing group, losing 9 percent. Its members D.R. Horton Inc., Lennar Corp. and Pulte Group declined as the slowdown in home sales enters its fifth year.
- The tires and rubber group lost 8.6 percent led by its single member, Goodyear, which fell after a J.P. Morgan analyst cautioned investors on the company because of significantly weaker demand for tire replacements.
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
- The end of quantitative easing currently scheduled by the Federal Reserve for the end of June might result in a weaker economy.
