Weekly Investor – Dec. 06, 2010
Down the Stretch They Come!
Market Summary:
The major U.S. equity averages all posted solid gains for the week, extending their advance into positive territory for the year. Suprising strength from the consumer was once again the catalyst as consumer sentiment towards the economy remained positive. Chain-store sales and vehicle sales both came in better than expected. In addition to the positive consumer data, investors cheered the thought of a tax deal becoming reality. While positive signs were numerous this past week, the market’s bears hung their hat on an unemployment report that came in much worse-than-expected. The latest reading showed a surprise rise in the unemployment rate, back up to 9.8%. As 2010 races to a close, investors hope the holiday spirit brings prospects for an equally prosperous 2011 for the equity markets.
Over the past week, top-performing sectors in the S&P 500® Index included Basic Materials (+5.7%) and Energy (+5.0%), while bottom-performing sectors included Consumer Staples (+0.9%) and Utilities (+1.3%). In the fixed-income market, the 10-year Treasury remained steady, ending the week at 2.9%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
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Positioning for Improvement
State Street Corp. (STT) is one of the world’s leading providers of financial services to institutional investors such as mutual funds, pension plans and corporations. Services provided by STT include research, investment management, trading and investment servicing.
In 2008, as the financial crisis unfolded, the operating environment became extremely challenging for STT. In addition to a steep decline in its assets under custody, STT faced market-driven liquidity constraints and mounting legal issues focused on its off-balance sheet assets. Actions taken by STT during 2009, as well as stabilization in markets, have largely addressed those issues. We believe STT’s valuation does not fully reflect the earnings power of the company in today’s more normalized market conditions. Furthermore, we believe STT has the potential to achieve higher than average market growth by continued expansion in markets outside of the United States. Because of these factors, we believe STT represents favorable odds for our clients over the next 3 to 5 years.
Top 10 Equity Holdings
| . | |
|---|---|
| Starwood Hotels | 4.0% |
| Google Inc. | 4.0% |
| Danaher Corp. | 3.7% |
| Qualcomm Inc. | 3.6% |
| Carnival Corp. | 3.6% |
| Energizer Holdings | 3.5% |
| Biogen Idec Inc. | 3.4% |
| MasterCard Inc. | 3.4% |
| FactSet Research | 3.3% |
| Maxim Integrated | 3.2% |
U.S. Equity Indices
| Index | 12/03/10 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 11,382.1 | 2.6% | 9.1% |
| NASDAQ | 2,591.5 | 2.2% | 14.2% |
| S&P 500 | 1,224.7 | 3.0% | 9.8% |
| Russell 1000 G | 565.0 | 2.7% | 12.9% |
U.S. Credit Rates
| Index | 12/03/10 | 11/26/10 | 12/31/09 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.2% | 0.1% |
| 5 Year T-Note | 1.5% | 1.5% | 2.6% |
| 10 Year T-Note | 2.9% | 2.9% | 3.8% |
| 30 Year T-Bond | 4.3% | 4.2% | 4.6% |
| Prime Rate | 3.3% | 3.3% | 3.3% |
This newsletter presents selected recommendations from portfolio managers of Argent Capital Management LLC, a registered investment advisor. Opinions reflect the portfolio manager’s judgment on the date above and are subject to change. A list of stocks recommended by Argent is available upon request. You should not assume that these recommendations are or will be profitable. In the course of it’s business, Argent’s client accounts may be buying and selling these stocks.
