U.S. Equity Market Radar (March 18, 2013)
The S&P 500 just keeps moving higher, continuing an impressive streak that began at the beginning of the year. Financials led the way this week but energy, materials and utilities weren’t far behind.
Strengths
- Financials were the best-performing sector for the second week in a row, rising by 1.35 percent. Investors continued to react positively to the recently released Federal Reserve stress test and the numerous announcements regarding stock buybacks, dividend increases or both. Wells Fargo and Bank of America were among the best performers this week.
- Utilities were also strong this week. CenterPoint Energy was the best performer, rising by more than 7 percent as the company agreed to form a master-limited partnership with a jointly owned subsidiary, potentially paving the way for other utilities to follow.
- DirecTV was the best-performing stock in the S&P 500 this week, rising 9.76 percent. The company removed itself from bidding for a Brazilian phone and internet company, which was viewed positively by the market.
Weaknesses
- The telecommunication services sector was down for the week as AT&T and Sprint Nextel suffered modest losses for the week.
- The consumer staples sector was essentially flat for the week as investors appeared to prefer areas with more growth potential as the economic momentum builds.
- Intuitive Surgical was the worst performer in the S&P 500 this week, falling 10.72 percent. The president of the American College of Obstetricians and Gynecologists discouraged the use of robotic systems for certain procedures, due to higher costs without necessarily better outcomes.
Opportunity
- The market continues to climb a wall of worry and is shrugging off any bad news. It may be a sign that investor confidence has returned and will propel the market higher.
Threat
- A market consolidation wouldn’t be a surprise after a strong start to the year.
