U.S. Equity Market Radar (April 2, 2012)

U.S. Equity Market Radar (April 2, 2012)

The S&P 500 Index rose 0.81 percent this week driven by the healthcare sector, which rallied on the prospect of a Supreme Court decision rejecting the Affordable Care Act.

Strengths

• Defensive sectors tended to outperform this week, along with healthcare, utilities and consumer staples were among the week’s best performers.
• Within the healthcare sector, managed care stocks were among the best performers with Wellpoint, Coventry Health and Aetna all rising by at least 10 percent.
• Red Hat was the best performer in the S&P 500 this week, rising by more than 15 percent as the company reported better than expected earnings and increased guidance.

Weaknesses

• With the likelihood of mergers and acquisitions disappearing for utilities, the sector was the worst performer in the S&P 500 this week.
• The energy sector was also weak as oil fell more than three percent on continued fears of an economic slowdown in China.
• Best Buy was this week’s worst performer on a stock-specific basis as the company announced disappointing results and closure of 50 big box stores.

Opportunities

• The market continues to grind higher on recent news and the “trend is your friend” until this pattern changes.

Threats

• The S&P 500 is arguably overbought in the short term and could be vulnerable to profit taking.