Energy and Mining Stocks Continued to Propel SPY and EWU
(Continued from Prior Part)
Energy stocks in the lead
Oil and gas drilling and exploration companies took the top three spots of the SPDR S&P 500 ETF (SPY) on October 6, 2015. These stocks were Denbury Resources (DNR), Nabors Industries (NBR), and Helmerich & Payne (HP). The stocks gained 19.4%, 12.6%, and 8.4%, respectively, on the day. The graph below shows the price movement of these stocks along with the rise in oil prices, represented by the United States Oil (USO), for the period since September 1, 2015.
The laggards
The healthcare sector overshadowed the gains in the energy and mining sector and stocks from the sector landed among the bottom three stocks of the SPY. These stocks were Avon Products (AVP), which offers cosmetics and personal care products, Endo International (ENDP), and Vertex Pharmaceuticals (VRTX) of the healthcare sector. The stocks yielded -5.2%, -4.7%, and -4.4%, respectively, on October 6.
Avon Products (AVP) is a highly volatile stock that fell by 5.2% after gaining 9.4% on October 5. The stock has earned three “buy” recommendations, 12 “hold” recommendations, and no “sell” recommendations. Generally, biotech stocks are also very volatile with a beta of more than one, which implies that the stocks move with greater intensity in both directions. Such stocks are more sensitive to the broad market movement. ENDP and VRTX have a beta of 1.3 and 1.4, respectively.
PepsiCo (PEP) beat analysts’ expectations and reported better-than-expected quarterly profits. Falling prices for commodities like sugar and the rising demand for soft drinks and snacks boosted the company’s quarterly profit to $533 million. The stock rose by 1.3% on October 6 after the earnings release.
Freeport McMoRan (FCX) rose by 5.8% on October 6 after it announced the reduction in the size of its board to nine from 16. The company is also expected to separate its oil and gas divisions, which should benefit the shareholders.
DuPont (DD) stock also surged on the day in the wake of the company’s announcement that its current CEO, Ellen Kullman, is stepping down this month and will be replaced by board member Edward Breen, who is also a veteran US executive. DuPont also announced an acceleration in its plan to trim expenses, which cheered investors.
In the next article, we will look at how the UK stock market performed on October 6.
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