U.S. Equity Market Radar (June 11, 2012)
The S&P 500 Index rose 3.73 percent this week as the global equity markets bounced on global government policy initiatives or speculation of forthcoming stimulus. Financials were the standout performers this week on hope of some resolution in Europe. Defensive sectors lagged but even the worst performer rose more than 2.5 percent.
Strengths
- The financial sector took the lead, rising by 4.71 percent, with a diverse group of stocks leading the way. AIG, Invesco and Citigroup were the best performers in the sector, all rising by more than nine percent.
- The materials sector was not far behind with chemical names such as best performer Eastman Chemical, rising more than 9 percent.
- The best individual stock performer this week was Iron Mountain which rose 18.8 percent as the company announced it was converting to a Real Estate Investment Trust.
Weaknesses
- The industrial distributors were the worst-performing industry group, falling by more than 3 percent for the week. Following Fastenal’s disappointing May sales results, the company fell by 6.7 percent this week.
- The oil & gas services group also came under pressure this week as Halliburton fell by more than 6 percent as the company warned of lower profit margins.
- Alpha Natural Resources was the worst performer in the S&P 500 this week, falling 10.6 percent, as the company announced significant cuts to its production guidance for 2012 and 2013.
Opportunity
- The market feels like it may be at an inflection point as Chinese authorities enacted broad-based stimulus, essentially conceding the economic slowdown required decisive action. This is a very positive step and a change in tone for China. If Europe follows through in the near future it could be the catalyst for change.
Threat
- Stresses continue to build in Europe and missteps by policy makers could negatively impact the markets.
