U.S. Equity Market Radar (January 14, 2013)
The market ended higher this week as it was a quiet week for economic data and the quarterly earnings season doesn’t kick off in earnest until next week.
Strengths
- The health care sector led the way, rising nearly 2 percent on broad-based gains. Celgene was the standout performer this week, rising 17.3 percent as the company guided earnings potential higher through 2017.
- Materials were also strong this week as agricultural chemical companies moved higher on the U.S. Department of Agriculture’s monthly report indicating tight supply for corn and soybeans heading into spring. Monsanto, CF Industries and Mosaic all benefitted from this report.
- Best Buy was the best performer in the S&P 500 this week, rising 17.3 percent. The company reported that sales stabilized during the holidays, increasing the odds that founder Richard Schulze’s takeover bid may proceed.
Weaknesses
- The telecom service sector was the worst performer as AT&T and Verizon performed weakly after paying hefty dividends.
- The utility sector also underperformed, falling by about 1 percent.
- Apollo Group was the worst performer in the S&P 500 this week, losing 12.8 percent. The company reported earnings this week and guided 2013 earnings below prior guidance. The company has also run into some accreditation issues for the University of Phoenix, with corrective actions likely needed.
Opportunity
- The focus will be on earnings over the next few weeks with a heavy dose of financials next week. JPMorgan Chase, Bank of America and Citigroup all report next week and will set the tone for this earnings season.
Threat
- The dysfunctional political process brings little hope for the U.S. to regain its AAA credit rating and more credit downgrades are possible if Washington remains acrimonious.
