U.S. Equity Market Cheat Sheet (July 25, 2011)
The figure below shows the performance of each sector in the S&P 500 Index for the week. Nine sectors increased and one sector declined. The best-performing sector for the week was technology which increased 3.66 percent. Other top-three sectors were energy and financials. Telecom was the worst performer, down 0.08 percent. Other bottom-three performers were industrials & materials.
Within the technology sector, the best-performing stock was Motorola Mobility Holdings which rose 16.52 percent. Other top-five performers were Sandisk, Apple, Cisco Systems, and Tellabs.
Strengths
- The human resources & employment services group was the best-performing group for the week, up 16 percent, led by its single member, Robert Half International. The firm reported second quarter earnings and revenue greater than the analysts’ consensus estimates.
- The motorcycle manufacturers group was the second-best performer, rising 10 percent. The group’s single member Harley-Davidson reported quarterly earnings and revenue above the consensus estimates.
- The healthcare services group outperformed, gaining 9 percent. Express Scripts made an offer to acquire Medco Health Solutions. Both pharmacy benefit management firms are members of the healthcare services group, and both stocks rose following the offer.
Weaknesses
- The office services & supplies group was the worst-performing group, down 5 percent. Group member Avery Dennison provided revenue and earnings guidance for the second quarter and full year, all of which were below the analysts’ consensus estimates.
- The household appliances group was the second-worst-performing group, losing 4 percent on weakness in the stock of its single member, Whirlpool. The large appliance maker reported quarterly earnings and revenue below the consensus estimates.
- The airlines group underperformed, falling by 3 percent on weakness in the stock of its single member, Southwest Airlines. The weakness in the airline group appeared to be related to investor concern over higher fuel prices.
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
- Failure to resolve the federal budget issue creates uncertainty, which is not helpful for markets.
