U.S. Equity Market Radar (March 12, 2012)
The S&P 500 Index managed modest gains again this week, rising 0.09 percent with consumer discretionary and telecom leading the way.
Strengths
- The telecom services sector was the best performer this week as expectations the company was gaining subscribers from competitors pushed Sprint up 11 percent.
- The consumer discretionary sector was boosted by strong performance from the home builders as numerous indicators are pointing toward improving sales traffic.
- Refining stocks were among the best performers in the S&P 500 this week despite overall weakness in the energy sector. Refining margins jumped by roughly $4 per barrel, a key indicator of profitability for the refiners.
Weaknesses
- The materials sector was the worst performer this week as fears of a China slowdown gripped the market. Freeport-McMoRan led the way, falling by more than 7 percent.
- The energy sector also faired poorly as coal stocks were weak for the second week in a row due to warm weather and high stockpiles at utilities.
- For the third week in a row, First Solar was among the worst performers in the S&P 500 as industry dynamics remain very difficult for solar companies.
Opportunities
- The market has been able to shrug off every negative data point and continues to climb that wall of worry.
Threats
- After such a strong start to the year, a pullback or consolidation in the market would not be surprising.
- It was announced late Friday afternoon that Greek credit default swaps (CDS) had been triggered. The market initially reacted negatively but eventually stabilized. It will be interesting to see how this is viewed in Europe over the weekend.
