Industrials Break Down, Now in Correction Mode
Concerns of a slowing global economy have taken a hit on industrial companies in recent weeks, sending the overall sector into correction mode.
Parker Hannifan’s disappointing earnings guidance this morning is the latest in a string of earnings reports from industrial firms that have reflected expectations for slower growth ahead. Other companies such as Stanley Black & Decker , Ingersoll-Rand , and Whirlpool have issued a similar outlook.
Although industrials helped lead the markets out of their depths in 2009 (S&P Industrials sector soared 144 percent from the market’s low in March 2009 to the market’s high in April 2011), the momentum has been lost amid a wave of stagnant economic data around the world, particularly in the U.S., China and Europe.
Sitting at an eight-month low, the S&P Industrials sector has officially entered correction mode, falling 12.5 percent from its April 29 high. In fact, since that high, industrials constitute the worst-performing sector in the S&P 500, outpacing declines by financial stocks, the worst performing sector so far in 2011.
Additionally, since the market’s April 29 high, two-thirds of the S&P 500 Industrial sector’s 60 components are down more than 10 percent. Just 4 stocks (Goodrich , Precision Castparts , Ryder , and Cintas ) have eked out gains in those 3 months.
Here are some of the lowlights around the industrial sector since April 29.