Weekly Investor – May 21, 2012
Greek Contagion
Market Summary:
The major U.S. equity averages all ended the week in negative territory as the potential of a Greek exit from the Eurozone weighed heavily on stocks and investors. In fact, the S&P 500® posted its worst performing week of the year. U.S. economic data was mixed as unemployment and housing continue their positive trends and consumer spending is at a record high when measured on both a real and nominal basis. However, last week, the U.S. leading indicators declined and missed expectations. In the end, pessimism abroad has most investors in a stand still as they look forward for more positive signs.
The S&P 500® closed down -2.4% for the week. The top-performing sectors in the S&P 500® Index included Telecommunications (-0.3%) and Consumer Staples (-1.4%), while bottom-performing sectors included Materials (-6.6%) and Financials (-7.0%). In the fixed-income market, the 10-year Treasury yield dropped slightly, closing out the week at 1.8%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Capitalizing on Growth Opportunities
Founded in 1916 and headquartered inCleveland,Ohio, Eaton Corp. (ETN) is a leading diversified industrial manufacturer of fluid power systems, electrical control products, automotive systems and medium to heavy truck transmissions.
ETN is exposed to relatively strong end markets despite current economic conditions and therefore remains relatively uninterrupted by global economic headwinds. Over the last decade, ETN’s management successfully transitioned its business from a primarily auto and truck component supplier to a manufacturer of high-technology power and fluid systems. These products have enabled the company to benefit from secular trends such as the transition into “cloud” computing via the internet and the need for greater automotive fuel technology. As the economy and market’s expectations improve, we believe ETN is well positioned to further capitalize on growth opportunities, representing favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| MasterCard Inc. | 5.0% |
| Biogen Idec Inc. | 4.8% |
| Gilead Sciences Inc. | 4.2% |
| Danaher Corp. | 4.1% |
| Qualcomm Inc. | 3.9% |
| Google Inc. | 3.9% |
| CBS Corp. | 3.6% |
| EMC Corp. | 3.4% |
| Intel Corp. | 3.3% |
| Jabil Circuit Inc. | 3.2% |
U.S. Equity Indices
| Index | 05/18/12 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 12,369.4 | -3.5% | 1.2% |
| NASDAQ | 2,778.8 | -5.3% | 6.7% |
| S&P 500 | 1,295.2 | -4.3% | 3.0% |
| Russell 1000 G | 609.6 | -4.7% | 4.9% |
U.S. Credit Rates
| Index | 05/18/12 | 05/11/12 | 12/31/10 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 0.8% | 0.8% | 2.0% |
| 10 Year T-Note | 1.8% | 1.9% | 3.3% |
| 30 Year T-Bond | 2.8% | 3.1% | 4.3% |
| 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.
