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Politics : The Obama - Clinton Disaster
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To: DuckTapeSunroof who wrote (32289)6/24/2010 6:08:10 PM
From: Hope Praytochange  Read Replies (2) of 103300
 
Investors Having Some Serious Doubts on Economy
By Matt Phillips
Investors are having some serious doubts on the economy. You can see them through all the selling of so-called cyclical stocks, or stocks thought to have particularly close ties to the expansion of the business cycle.

Some of those issues are getting hammered Thursday. The consumer discretionary sector and materials sector are leading the broader S&P lower.

One stock that particularly caught our eye is the newspaper company Gannett. (Media and advertising companies are typically seen as a pretty cyclical industry, benefiting from a pickup in economic activity.)

We’ve been watching Gannett recently as something of a proxy for investor sentiment on the economy. (After all, it’s not like the newspaper business is in a period of secular growth, leading us to believe that one of the best reasons to buy the shares was a hope the company benefits from a cyclical increase in advertising spending.)

As the broader markets rallied off the early March 2009 lows, Gannett lagged behind, suggesting some investor skepticism about whether an economic recovery was really in the offing. It took until the middle of July 2009, before investors were convinced, that’s when the shares really started moving. Since then they’ve had a pretty ridiculous run.

As of the close of trading Wednesday, the shares were up 350% over the last year. (Other newspaper stocks have also posted huge gains of low bases over the last year. McClatchy? 570%. A.H. Belo? 577%)

But Thursday, Gannett was one of the worst performing stocks in the S&P 500, down 5.7% at last glance, indicating to us that investors need to be convinced the recovery remains real.
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