The broader market bounced back at a good clip as investors continue to mull over President Trump’s tariff plan and the state of the labor market.
One thing that stands out about last week’s sector performance is that investors were betting big on the state of the consumer.
Here’s how things shook out overall:
Key Insights:
- The S&P 500 (SPY) bounced back 2.5% last week.
- 8 of 11 major sectors closed the week higher.
- Three sectors beat the S&P 500, while eight sectors lagged the broader market.
- The consumer discretionary sector (XLY) led the pack with a 3.6% gain.
- The energy sector (XLE) was the worst performer at -0.8%.
Overall, it’s encouraging to see broader bullishness return after President Trump’s tariff spooked markets two Fridays ago. There are still some major question marks surrounding some major trading partners such as China and India, but investors seem to be adopting a “wait and see” approach.
Let’s dig deeper into last week’s leading and lagging sectors to see what our screens — and what my Green Zone Power Rating system — have to say…
Consumer Discretionary Stocks Lead the Charge
The consumer discretionary sector (XLY) charged higher as investors seemingly shrugged off tariff impacts (for now).
Below, you’ll find nine consumer discretionary sector stocks that closed last week within 10% of their 52-week highs and how they stack up in my Green Zone Power Rating system:
One thing that stands out to me in the list above is a big bet on parts retailers. We have four companies on the list that sell replacement parts for either automobiles or other industrial equipment.
If the economy weakens, consumers gravitate toward keeping their current cars on the road rather than buying a new vehicle.
Could this be a bet on a broader economic slowdown? It’s too early to say…
But last week’s bullish action in consumer stocks like AZO, ORLY, GPC and TSCO is a sign that investors are shifting their focus.
And what might be most encouraging is that three out of four of those stocks are rated “Bullish” in my Green Zone Power Rating system.
If you’d like to run those stocks through the gamut of my system, click here to add my flagship Green Zone Fortunes investing service to your toolkit. It’s times like these when a systematic approach can really cut through the noise and point you in the right direction.
Let’s move on to last week’s laggard … the energy sector.
Energy Lags Again … but Not by Much
Overall, the energy sector only dropped by 0.8% last week.
Here’s a look at the energy sector stocks that closed the week within 10% of their 52-week lows.
Only two made the list:
Looking closer at ONEOK Inc. (OKE), earnings were a significant driver of its sinking share price last week. But my system had already sniffed this stock out, as it has rated “Bearish” for a while now.
Last Monday, ONEOK beat on earnings per share by one cent ($1.34 versus $1.33 expected). And revenue for the second quarter came in at $7.89 billion, a strong growth rate of 61.2% compared to the same quarter a year ago.
However, the reported revenue was much lower than expected, missing consensus projections of $8.56 billion.
With so much bullishness in the market, ONEOK’s revenue miss is a good reminder that companies have to make good on lofty expectations — or else investors will start looking for opportunities elsewhere. With the stock down 27% year to date now, ONEOK is learning that lesson the hard way.
To good profits,
Editor, What My System Says Today