U.S. Equity Market Radar (June 18, 2012)
The S&P 500 Index rose 1.30 percent this week as the global equity markets rebounded for the second week in a row on global government policy initiatives or speculation of forthcoming stimulus. The telecommunication services sector was the best performer this week, while information technology lagged.
Strengths
- The telecommunication services sector had another strong week as investors gravitate toward steady dividend paying stocks. The sector is the best performer over both the past month and three months.
- The energy sector bounced back this week after being the worst performer over the past month. Natural gas prices rose sharply this week and were likely at least part of the catalyst for the group.
- The best individual stock performer this week was Frontier Communications Corp. which rose 13.9 percent on little news.
Weaknesses
- St Jude Medical was the worst performer this week, falling 8.8 percent on reports that an incident of a wire used to connect defibrillators was defective.
- Electronic Arts and Gamestop were among the worst performers in the S&P 500 as total video game and related hardware sales fell 28 percent in May.
- Nike fell 6.3 percent this week on reports the company’s order growth in China was slowing materially.
Opportunity
- As we mentioned last week, government policy is coming to the market’s rescue as Chinese authorities enacted broad based stimulus and Europe bailed out Spanish banks. The Fed is likely to announce additional easing steps next week and global central bankers are ready to act if Greek elections cause a disruption.
Threat
- Stresses continue to build in Europe and missteps by policy makers could negatively impact the markets.
