The stock market rally continued in September, 2009, although it began to peter out in the last trading week of the month. Investors that owned the top five performers large cap stocks in the S & P 500 now face the difficult decision of whether to hold on or take some profits.
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The top two best performing large cap stocks in September, 2009 were in the Energy Sector. Chesapeake Energy (NYSE:CHK) and Baker Hughes (NYSE:BHI) were up 24.6% and 23.8%, respectively.
Riding the Wave
Chesapeake Energy rode the general wave of investor euphoria regarding the coming recovery and anticipated future growth in the economy. This momentum seems to have counteracted the bearish case on natural gas levered stocks, which is based on sluggish industrial demand and the looming possibility of full storage for natural gas. Chesapeake Energy also entered a midstream joint venture and netted $588 million to help fund its ambitious capital plan.
Baker Hughes announced a surprise purchase of BJ Services (NYSE:BJS) at the beginning of the month. BJ Services is one of the market leaders in "pressure pumping," or the technique of hydraulic fracturing and the acquisition was an attempt by Baker Hughes to bulk up in this increasingly important area that is critical in developing the natural gas and oil shale plays.
Investors sold off Baker Hughes after the deal was announced. But after digesting the deal, the stock moved higher during the balance of September.
Dow Chemical (NYSE:DOW) was up 23.2% for the month. There wasn't any specific news on the company to account for the gain, but as a large chemical and industrial company the stock is highly levered to an economic recovery. Investors were no doubt positioning among the large cap names in anticipation of this. Dow Chemical also reached an agreement to sell its Morton Salt unit during the month for $1.68 billion.
The Rest of the Bunch
Two technology stocks round out the list of the top five. Yahoo (Nasdaq:YHOO) finished the month up 22%, while Motorola (NYSE:MOT) rose 19.6%. Carol Bartz, the CEO of Yahoo was busy in September repositioning the company to compete better with Google (Nasdaq:GOOG). The company sold off some non-core assets during the month, and is spending $100 million to advertising to rebrand the company.
Motorola is in the midst of releasing a new line of cell phones based on Google's Android operating system, something that the company hopes will revive its franchise in the wireless market.
The Bottom Line
September, 2009 was a great month to be long equities, as the V shaped stock market rally off the bottom in March 2009 continued for another month. Investors must now decide if they want to book some profits or hang on for another month. (For a primer on the oil industry, refer to our Oil and Gas Industry Primer.)
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