U.S. Equity Market Cheat Sheet (September 26, 2011)
The domestic stock market was lower this week with the S&P 500 Index down by 6.54 percent. The figure below shows the performance of each sector in the index for the week. All ten sectors declined. The best-performing sector for the week was utilities which decreased 1.69 percent. Other top-three sectors were telecom services and technology. Materials was the worst performer, down 12.25 percent. Other bottom-three performers were energy and financials.
Within the utilities sector, the best-performing stock was Progress Energy, up 1.42 percent. Other top-five performers were PG&E Corp., Duke Energy, Dominion Resources, and American Electric Power.
Strengths
- The healthcare technology group outperformed, up 2 percent on strength in its single member, Cerner Corp. The firm, which has been prospering from the sale of computer software for medical records, was among a list of stocks, prepared by the strategist of a major securities firm, which might outperform.
- The computer hardware group outperformed, down 0.05 percent, led by its largest member, Apple. The company is holding a press conference on October 4 where it is widely expected to unveil the next version of the iPhone.
- The footwear group outperformed, down 1 percent, led by its single member, Nike. The firm reported quarterly earnings and revenue above the analyst consensus estimate, and it raised revenue guidance for this fiscal year.
Weaknesses
- Five energy-related groups (coal & consumable fuel, oil & gas equipment & services, oil & gas refining & marketing, oil & gas drilling, and oil & gas exploration & production) were in the bottom-ten groups for the week, declining between 15 and 23 percent. The price of crude oil declined for the week. Investor concern over a weaker economy going forward was likely the reason for the declines.
- Three metals-related groups (diversified metals & mining, steel, and aluminum) were also in the bottom-ten groups, falling between 16 and 22 percent. Macroeconomic concerns were likely responsible for the weakness.
- The multi-sector holdings group declined 18 percent on weakness in its single member, Leucadia National Corp. The diversified holding company this week acquired two million shares (about $25.2 million of stock) of Jefferies Group, Inc. from the CEO of Jefferies. Leucadia owned stock in Jefferies prior to this transaction. Macroeconomic concerns may have contributed to the weakness.
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
- A mid-cycle slowdown in the domestic economy would be negative for stocks.
- An escalation in concerns over sovereign debt obligations in Europe would be negative for stocks.
