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.
IN PICTURES: Digging Out Of Debt In 8 Steps

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.

Chemical Assets
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.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Mutual Funds & ETFs

    Top 5 Bear Market Mutual Funds

    Discover five bear market mutual funds that investors can turn to for generating maximum capital appreciation during a bear market.
  2. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  3. Markets

    The Origins of the Chinese Stock Market Collapse

    Learn about some of the reasons for the volatility in the Chinese stock market, including expansion of margin lending and governmental support.
  4. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  5. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  6. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  8. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  9. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  10. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Bear Closing

    Purchasing a security, currency, or commodity in order to close ...
  3. Maximum Drawdown (MDD)

    The maximum loss from a peak to a trough of a portfolio, before ...
  4. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  5. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  6. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. How can I hedge my portfolio to protect from a decline in the food and beverage sector?

    The food and beverage sector exhibits greater volatility than the broader market and tends to suffer larger-than-average ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!