Portfolio market strategies and analysis

¶ … Marketing

The market portfolio built includes Steel Dynamics (STLD), Exxon Mobile (XOM), Alcoa (AA), Disney (DIS), Merck (MRK), Pfizer (PFE), 3M (MMM), Coca-Cola (KO), Johnson & Johnson (JNJ) and EI DuPont (DD). Given the composition of this portfolio, it will be measured against the Dow Jones Industrial Average and the S&P 500, based on the values for market close September 18th and September 25th.

There were several market news drivers for the week. The G20 met and agreed to rein in financial industry excess in an effort stabilize the world's financial markets (Reuters, 2009). The Dow suffered a sharp drop beginning Wednesday afternoon, driven by news that the Federal Reserve was leaving interest rates between 0 and 0.25%. Pfizer dropped 2% in the wake of that news as well, although the bulk of the selling was in the energy and financial sectors (Gibson, 2009). Also mid-week, a report surfaced that oil inventories were high, which caused the price of crude to fall, taking oil companies such as Exxon Mobil down with it.

Johnson & Johnson saw a small bump early Tuesday, possible related to increased talk of mergers in the pharmaceutical sector (Associated Press, 2009). They received a couple of approvals this week and in both cases, the stock fell slightly after the approvals were announced, a classic case of buying on the rumor and selling on the news.

Overall, most stocks fell for the week. The Dow fell 1.58% and the S&P 500 fell 2.24%. Most stocks were within this range, but there were four standouts. Three -- Steel Dynamics, Alcoa and IE DuPont fell in excess of 6% for the week. The drop in the first two can be attributed to weakness in commodities. The other outlier was Pfizer, which was the only stock to gain this week, up 0.49%. Even fellow pharmaceutical firms JNJ and MRK dropped, indicating specific strength in Pfizer, most likely tied to merger talks. Most stocks in the portfolio, however, roughly tracked the market, which slumped on generally discouraging sentiment with regards to economic recovery, spurred by weak new home sales and durable goods sales, two key economic indicators (Perman, 2009).

Stock

Close Sept 18

Close Sept 25

Return

STLD

17.85

16.61

-6.95%

XOM

69.81

68.7

-1.59%

AA

14.04

13.08

-6.84%

DIS

28.44

27.62

-2.88%

MRK

31.88

31.25

-1.98%

PFE

16.32

16.4

0.49%

MMM

74.65

73.8

-1.14%

KO

53.83

52.97

-1.60%

JNJ

60.72

60.62

-0.16%

DD

33.77

31.74

-6.01%

Dow

-1.58%

S&P 500

-2.24%

Works Cited:

All stock quotes from MSN Moneycentral. Retrieved September 25, 2009 from http://moneycentral.msn.com/home.asp

No author. (2009). Stock index futures point to higher open. Reuters. Retrieved September 25, 2009 from http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20090925&id=10373441