The best-performing sectors of the second quarter included those that benefited from booming commodity prices, while the usual suspects...
The best-performing sectors of the second quarter included those that benefited from booming commodity prices, while the usual suspects lurked at the bottom of a ranking of 99 Dow Jones-Wilshire 5000 subsectors.
The index, which covers more than 98 percent of the U.S. stock market, shed 1.9 percent in the quarter.
An index of coal stocks was by far the biggest winner, as surging coal prices lifted shares of miners.
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Prices for central Appalachian coal, a benchmark grade, added 70 percent in the quarter on overseas demand.
While shares of coal miners like Peabody Energy (BTU) and Arch Coal (ACI) have already seen big run-ups, Calyon Securities analyst Gordon Howald rates both stocks “buy,” saying constrained supplies mean coal will keep rising.
Mobile telecommunications, the poorest-performing first-quarter subsector with a 40.2 percent decline, rallied in the second quarter after some analysts said shares were cheap.
But Oppenheimer analyst Timothy Horan says the sector could struggle ahead on pricing competition. Oil-industry-services stocks like Schlumberger (SLB) are benefiting as oil’s rise entices energy companies to expand operations.
The price of oil recently crossed $144 a barrel for the first time.
Anheuser-Busch (BUD) boosted an index of beer brewers, as shares added 17.3 percent since rumors of a buyout offer from InBev circulated May 23. The Belgian brewer eventually offered $65 a share in cash, but the maker of Bud rejected the offer.
On the declining side, troubles in the mortgage, housing and financial industry continued to take a toll. American International Group (AIG), the world’s largest insurer, fell to its lowest point in more than a decade on worries about performance, dragging down an index of full-line insurers.
Airlines took a hit on surging fuel costs, while gambling stocks continued to fall on slow spending.
The casino industry has long been seen as protected in downturns, but Las Vegas Sands (LVS) and Wynn Resorts (WYNN) are not proving so resilient. Thomas Weisel Partners analyst Jake Fuller says investors should stay on the sidelines for both.