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The winners -- and the losers
Rising oil prices gave energy, utility stocks a boost; steel, gold stocks find it tough sledding.
June 21, 2005: 9:01 AM EDT
By Alexandra Twin, CNN/Money Staff Writer

NEW YORK (CNN/Money) - As any pop song or cheesy reality TV show will tell you, some winners fade fast and some losers find redemption -- eventually.

Here's a quick look at the stock market's likely winners and losers in the first half, and whether they'll fade, or find redemption, in the second half.

Energy producers, home builders and selected retailers, such as department stores, had a hot first half, although some zoomed in the first quarter and coasted in the second.

Meanwhile, automakers, electronics retailers and Internet retailers had a tough enough first quarter to keep them in the red for the first half, even though they stabilized in the second quarter.

Producers of steel, aluminum, gold and other commodities saw just the opposite -- stable in the first quarter, down, down, down in the second -- and so down for the first six months.

The tech sector's been a mixed bag, with chipmakers and wireless telecom stocks doing well enough in the second quarter to make up for sluggishness in the first. But computer makers have languished all year.

Energy: how high is up?

With oil prices again at record highs, the underlying stocks, particularly anything related to oil and oil services, have benefited.

Year to date, the best-performing sectors remain coal producers, and oil and gas explorers, refiners and drillers. Valero Energy is the biggest gainer on the S&P 500 so far this year, up more than 64 percent. Furthermore, 11 of the top 20 S&P 500 performers are in the energy sector.

A brief respite in oil prices in April and May meant that energy stocks were less buoyant in the second quarter, but the recent spike in oil prices could mean the glory days are not over for this sector.

Energy was also the leading sector last year, followed by utilities.

Utilities have the juice

Companies that generate power have done extremely well over the last 18 months. This is partly due to the fact that they are among the best dividend-paying stocks out there and are fairly safe bets in a volatile market.

Utilities usually underperform the broader market in a rising interest rate environment, but have done very well so far this year, and may keep that up in the second half, according to recent comments from Merrill Lynch senior U.S. strategist Kari Pinkernell.

Other winners

Among sub-sectors, home building rose 23 percent in the first half and around 14 percent in the quarter.

With investors still pouring money into real estate, home building stocks have managed to rally throughout the first half, extending 2004's boom. However, analysts and economists have been arguing for months that the market is ripe for a slowdown.

Department Stores rose 23 percent in the first half and 9.7 percent in the quarter.

While the overall retail sector was mixed, department stores did well, with Sears Holdings and May Department Stores among the 10 best-performing S&P 500 stocks this year, with most of the gains accrued in the first quarter.

After languishing in the first quarter, the broad health care sector made a jump of nearly 5 percent in the second quarter, as investors began to rotate money into what's often viewed as a defensive sector. Some analysts see more gains in the second half.

Basic materials

Steel, gold and aluminum stocks were among those that surged along with higher commodity and raw material prices. But the surge in the stocks may have peaked after the first few months of the year. The sector has had a tough time in the second quarter, and, some analysts reason, will also struggle in the second half.

Steel is down more than 10 percent year-to-date, 15 percent in the second quarter alone. Gold stocks are down 14 percent year-to-date, 10 percent in the current quarter.

Other losers

Airline stocks have tumbled nearly 15 percent year to date, although most of the losses happened in the first quarter.

The worst-performing airline year-to-date? Delta Air Lines, down more than 50 percent, although the stock stabilized somewhat in the current quarter.

Automakers and auto parts and equipment makers, both down around 19 percent year to date, are up roughly 7 percent so far this quarter.

This is no surprise for anyone following the recent fortunes of General Motors, Ford Motor and suppliers like Delphi.

For a look at why the market may get "unstuck" in the next half year, click here.  Top of page


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