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

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

The S&P 500 Index fell 0.32 percent this week as economic data was mixed and many market participants were waiting on Federal Reserve Chairman Ben Bernanke’s Friday morning’s speech from Jackson Hole, Wyoming. Chairman Bernanke didn’t disappoint but also didn’t offer a lot of additional information, essentially saying the Fed has an easing bias and will implement additional quantitative easing if deemed necessary.

Strengths

• The consumer discretionary sector was the best performer this week rising a modest 0.21 percent as retail sales data for August was generally better than expected. Tiffany & Co., J.C. Penny, Carnival Corp. and Coach all rose by at least 4 percent.
• The health care sector was also able to eek out a small gain with WellPoint, Waters Corp. and Edwards LifeSciences Corp. leading the way with gains 3 percent or more.
• Hudson City Bancorp was the best performer in the S&P 500 this week rising by 11.65 percent as M&T Bank agreed to buy the company for $3.8 billion.

Weaknesses

• The industrials sector was the worst performer this week as a weak global economic environment is making it difficult for many bellwether names in this space. Joy Global, Eaton Corp., Cummins and Fluor were among the worst performers for the week.
• The utilities sector lagged for the third week in a row as the market continued to rotate into other areas. Utilities remained the worst-performing sector over the past three months, rising just 1.26 percent vs. more than 7 percent for the S&P 500.
• First Solar was the worst performer this week in the S&P 500, falling by more than 19 percent as the company reported it had stopped delivering modules to a power plant in Arizona. It is believed that current inventory at the site may not be installed until next year, increasing concerns about the level of inventory and operating rates at the company.

Opportunity

• The market remains focused on the potential monetary policy action from the Fed, the European Central Bank (ECB) and China, looking past the current economic weakness.

Threat

• The S&P 500 has almost reached its April high, a technical resistance level, and could be vulnerable to any disappointments from global central bankers.