U.S. Equity Market Radar (March 26, 2012)
The S&P 500 Index was down 0.50 percent this week as a growth scare is developing in China which led to the sell-off of cyclicals, particularly energy and industrials.
Strengths
- The S&P 500 consumer discretionary sector was the best performer this week, as brick and mortar and internet-based retailers rallied. Best performers included Netflix, Best Buy, Priceline.com, Amazon.com and Tiffany & Co. Tiffany’s reported earnings that were well received and the market liked Amazon’s purchase of Kiva Systems, Inc.
- Within the S&P 500 technology sector, Western Digital was the best performer, rising nearly 11 percent.
- Watson Pharmaceuticals was up nearly 11 percent for the week on reports the company is in talks to buy Actavis, a Swiss drug company.
Weaknesses
- The energy sector was the worst performer this week, as investors are becoming increasingly concerned about an economic slowdown in China. Compounding this was an announcement from Baker Hughes that pressure pumping is weak and margins have been negatively impacted.
- The industrial sector was weak for similar reasons, as Joy Global and Caterpillar were among the worst performers due to the China slowdown fears.
- Sears Holdings was the worst performer in the S&P 500 this week, falling by more than 12 percent. Going into this week, the stock had risen by 160 percent this year and it appears to be a normal pull-back after such a strong run.
Opportunities
- While the market was down modestly this week, the current bull market appears to be intact.
Threats
- The S&P 500 is arguably overbought in the short-term and could be vulnerable to profit-taking.
