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Sector Wrap: Homebuilders, Logistics, Gold Miners Thursday, June 10, 4:19 PM ET
The markets remain volatile this week as the mess in the Gulf of Mexico still dominate the headlines. BP continues its efforts to contain the spill as a relief well is being drilled, but pressure is mounting on the stock. The US government is calling for the company to suspend its dividend to ensure every possible dollar goes towards the clean-up effort and the legal claims, but the company has held its ground stating that the dividend is secure. On the week, the Dow has gained 1.7%, the S&P has added 1.1%, but the Nasdaq is heading lower, off about 1%.
Despite the negative headlines, analysts are finding bright spots in the home building sector. Stifel Nicolaus upgraded shares of PulteGroup (NYSE:PHM), DR Horton (NYSE:DHI) and MDC Holdings (NYSE:MDC) from sell to hold, citing valuation. The firm believes the markets are undervaluing these homebuilders as the economy is on the right track, but it did adjust its EPS estimates lower for 2010.
The iShares Dow Jones Home Construction ETF (AMEX:ITB) is trading lower on the week by 1.5%, despite today's 3% move up.
Another positive sign about the economy is coming from the logistics sector. Investment firm Baird expects CH Robinson Worldwide (NASDAQ:CHRW) to begin expanding it margins and picking up market share over the next few quarters. And FedEx (NYSE:FDX) has increased its quarterly dividend by more than 9% this week as management remains optimistic over the direction of the economy.
The strong move in the markets on Thursday has pushed the iShares Dow Jones Transportation ETF (AMEX:IYT) into the green as the ETF is up 3% today and 1.5% this week.
And despite the improvements to the macro economy, investors continue to seek shelter with gold. The spot price spiked above $1250 per ounce on Monday, but has since retreated. While the SPRD Gold Trust (AMEX:GLD) is only even on the week, the Market Vectors Gold Miners ETF (AMEX:GDX) has gained more than 3%. Components of the ETF that are helping the most include Newmont Mining (NYSE:NEM), Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG).
While the Market Vectors Gold Miners ETF is up on the week, its trading close to even today as the gold miners are not participating in the market rally.
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