U.S. Equity Market Radar (April 16, 2012)
The S&P 500 Index fell 1.99 percent this week, the biggest weekly drop this year as concerns mounted over a global economic slowdown and financial imbalances in southern Europe.
Strengths
- Supervalu was the best performer within the S&P 500, rising 25 percent. The company reported earnings that are more or less even with expectations, but the stock appears to have benefited from a significant short squeeze.
- Consumer discretion was the best performing sector, as the homebuilders bounced back from last weekās weakness to be the top industry group this week.
- Other strong performers for the week include Hewlett-Packard, Starbucks and Safeway.
Weaknesses
- The financial sector was the worst performer this week as European concerns resurfaced and initial earnings reports within the sector met expectations.
- The energy sector was also weak on concerns of global economic weakness.
- F5 Networks was the worst performer this week, falling by more than 10 percent as a sell side-analyst raised concerns that the company may have had to push really hard to close deals at the end of the quarter, potentially increasing the odds of an earnings miss.
Opportunity
- The market didnāt respond positively to early earnings reports and suffered its worst week of the year. This may set a precedent for next week as earnings releases are set to pick up.
Threat
- The S&P 500 is arguably still overbought in the short term and could be vulnerable to profit taking after the rally in the first quarter.
