U.S. Equity Market Radar (March 25, 2013)

U.S. Equity Market Radar (March 25, 2013)

The S&P 500 pulled back slightly this week after reaching a new 12-month high in the prior five-day period. Given the news out of Cyprus, defensive sectors led the broader market as investors took profits in financials, materials and energy.

click to enlarge

Strengths

• Walgreen led consumer stocks and the S&P 500 this week after AmerisourceBergen agreed to handle its pharmaceutical distribution.
• Sprint Nextel outperformed the telecom sector as the Federal Communications Commission’s (FCC) review of Softbank's proposed $20 billion purchase of 70 percent of the company is on track, according to FCC Chairman Julius Genachowski.
• Nike jumped 12 percent on Friday after reporting third quarter earnings that topped analysts’ forecasts. The company showed better-than-expected strength in China, and improving gross profit margins.

Weaknesses

• Cliffs Natural Resources declined 6 percent for the week on downgrades from industry analysts related to global iron ore pricing.
• Morgan Stanley led the decline in the financials this week as investors took profits following further stress in the European banking sector this week out of Cyprus.
• Oracle was the worst performer in the S&P 500 this week as the company reported sales and earnings that missed analysts’ estimates due to slower hardware sales. The shares fell the most since 2011.

Opportunity

• The market continues to be resilient despite further negative news out of Europe regarding a proposed bank tax in Cyprus that weakened investor confidence in the region’s ability to resolve its ongoing debt crisis.
• The Federal Reserve Bank stated this week that it intends to maintain its asset purchase program in order to further stimulate job growth and boost the economy.

Threat

• A market consolidation wouldn’t be a surprise after a strong start to the year.