U.S. Equity Market Cheat Sheet (June 20, 2011)
The figure below shows the performance of each sector in the S&P 500 Index for the week. Seven sectors gained and three declined. The best-performing sector for the week was consumer staples which increased 1.20 percent. Other top-three sectors were industrials and utilities. Materials was the worst performer, down 1.96 percent. Other bottom-three performers were energy and technology.
Within the consumer staples sector, the best-performing stock was Lorillard, which rose 11.51 percent. Other top-five performers were Tyson Foods, Walgreen, Colgate-Palmolive, and Brown-Forman.
Strengths
- The healthcare facilities group was the best-performing group for the week, up 8 percent, led by its single member, Tenet Healthcare.
- The retail computer & electronics group outperformed, rising 6 percent on strength in member Best Buy. The retailer reported first quarter earnings and revenue above the consensus estimates.
- The apparel & accessory group outperformed, up 4 percent. Group member VF Corp. agreed to buy Timberland for about $2 billion in cash in an effort to add scale to its outdoor clothing offerings.
Weaknesses
- The metal & glass containers group was the worst performer, losing 6 percent, led down by member Owens-Illinois. The manufacturer of glass containers announced that it expects second quarter earnings to be lower than originally forecast because of disappointing demand and supply chain problems.
- The fertilizer & agricultural chemicals group fell 6 percent with both group members (Monsanto and CF Industries Holdings) declining. The Senate voted for ending the ethanol subsidy. The vote was to amend an economic development bill which may not pass.
- The coal & consumable fuel group underperformed, down 5 percent. All three members of the group sold off with the weakness probably related to the decline in the price of crude oil during the week.
Opportunities
- There may be an opportunity for gain in merger & acquisition 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.
- The nuclear disaster in Japan creates uncertainty, which is not good for stock prices.
