U.S. Equity Market Radar (February 24, 2013)

U.S. Equity Market Radar (February 24, 2013)

The S&P 500 fell for the first time this week as the market reacted to the Federal Reserve’s minutes from the January 29-30 meeting which indicated policymakers were concerned with the risks surround the current Quantitative Easing (QE) program. The market is concerned that if the Fed were to prematurely stop the QE program, a key support for the market would be withdrawn.

Strengths

• Defensive areas outperformed this week as the staples sector led the way. Safeway was the best performer, rising by 11.1 percent on better-than-expected earnings results. Coca-Cola, Philip Morris and Colgate-Palmolive also were strong performers.
• Telecom services and utilities were strong this week as they are classic defensive areas in a market sell-off.
• Hewlett-Packard was the best performer in the S&P 500 this week, rising 14.4 percent. The company reported earnings and updated investors on its turnaround efforts, which included raising the company’s forecast for the second quarter above Wall Street estimates.

Weaknesses

• The materials sector was the worst performer by a wide margin. Fears of a premature ending to QE and reports of China implementing policies to slow the property sector were the likely culprits pulling the sector down.
• The consumer discretion sector also underperformed, largely driven by housing-related names which suffered a bout of profit taking.
• Garmin was the worst performer in the S&P 500 this week, losing 10.6 percent. The company reported fourth quarter earnings that missed estimates and guided full-year 2013 earnings lower.

Opportunity

• Retailers are beginning to report and a few of key names to watch for next week are Lowe’s, Home Depot and Target.

Threat

• The market finally pulled back just a tad this week, but more consolidation wouldn’t necessarily be a surprise.