TSC 21: Turnaround Candidates Maytag, Level 3 Weigh on Index

The new index shed 0.8% amid weak earnings from the home appliance maker.
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TheStreet.com 21 Index sputtered Tuesday, declining more than the broader indices. (

What is TSC 21?)

The TSC 21, a new index of 21 components designed to be a leading indicator of the economy's direction for the rest of the year and beyond, retreated 7.82 points to 1007.92, dragged down by Maytag's disappointing earnings and a few components that suffered collateral damage from industry counterparts. Among the major indices, the

Dow Jones Industrial Average

ended down 0.5% at 9128, while the

Nasdaq

fell 1 0.1% to 1753. The

S&P 500

shed 0.3% to 1000.

Among the biggest decliners was

Maytag

(MYG)

, which shed 2.35% to $25.73 after the appliance maker

posted a decline in second-quarter earnings as expected. The company noted that sales of vacuum and other "floor care" products were off 20% amid fierce competition from lower-costs rivals, which weighed on the stock. "I do not anticipate that we'll have a recovery here in the next six months," Chairman Ralph Hake said in a conference call.

A turnaround play of a different stripe was knocked lower Tuesday, as

Level 3 Communications

(LVLT)

shed 3.6% to $5.62. News that

Loral

(LOR) - Get Report

was entering Chapter 11 bankruptcy protection cast a pall over all telecom companies.

Elsewhere, airline bellwether

Continental

(CAL) - Get Report

eased 3.9% to $14.80. The company, which reports earnings Thursday, has seen its shares more than tripled since its March lows.

All told, 15 of the 21 components finished in the red. Two that bucked the trend were

Solectron

(SLR)

and

Bank of New York

(BK) - Get Report

.

Tech outsourcer Solectron rose 5.4% to $5.27. The stock gained 5% Monday after the company announced it reached a deal with creditors to redefine its credit lines. Solectron, whose stock got smacked down in June after posting a big loss, said its creditors amended the definition of "tangible net worth" on its $450 million in credit facilities, letting the company avoid violating its credit agreements. The stock is up 42% since June 20 and is nudging up toward its 52-week high of $5.93.

Bank of New York got a lift from a

surprisingly strong earnings report from

Merrill Lynch

(MER)

. Merrill's report signaled that investing banking was picking up, a bullish signal for Wall Street. Bank of New York, meanwhile, rose 1.9% to $31.44. Whether Wall Street's rising tide lifted Bank of New York's boat as well will be revealed Thursday, when the company posts earnings.

The index, which was assigned an opening value of 1000 based on the closing prices of the 21 components on July 3, is up 0.8% since its inception.

For the index, TheStreet.com selected 21 companies well-suited to serve as a reality check for the rally. The 21 companies represent a diverse range of industries, but unlike indices designed to represent the broader market, such as the Dow Jones Industrial Average or the S&P 500, TheStreet.com 21 doesn't represent every sector of the economy. The goal in choosing TheStreet.com 21 was to select stocks that were hypersensitive to the times. If the economic landscape truly has improved, TheStreet.com 21 should reflect it first, and rise accordingly. If the economy is stalling, the index will decline -- a harbinger of bad news to come.

Want to know more about TSC 21? Click here for an introduction, here for the latest stories on the TSC 21 and here to view the entire chart of TheStreet.com 21 components, including the reasons for their inclusion.