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A slew of consumer stocks are now oversold as S&P 500 falls for a fourth week in a row

AI-generated analysis

📉 The S&P 500 recorded its fourth consecutive losing week as U.S.-Iran tensions intensified market volatility.

💤 An RSI below 30 indicates an oversold condition, which some traders view as a potential buying opportunity.

⚠️ Conversely, stocks with an RSI above 70 are considered overbought and may be nearing short-term highs.

🍫 McCormick emerged as the third-most oversold stock in the S&P 500 following a sharp decline.

📉 McCormick dropped more than 20% this month but saw relative strength on Friday after news of potential merger talks with Unilever.

🏭 Genuine Parts held the most oversold position among consumer stocks with an RSI reading as low as 13.6.

🥫 Other noted oversold names include General Mills and Conagra Brands as consumers tighten budgets due to geopolitical instability.

⛽ Energy companies led the overbought list, driven by rising oil prices amid the ongoing regional conflict.

🔝 APA topped the overbought charts with an RSI of 81.7 after rising roughly 14% in the week.

⚠️ Investors are cautioned that high RSI readings on energy stocks like Occidental Petroleum may signal a need to pare positions.

🗞️ CNBC Pro utilized LSEG data to identify S&P 500 companies that met specific weekly performance thresholds.

📊 The analysis covered sectors ranging from consumer staples to industrial products and automotive solutions.

Bullish Signals
  • McCormick could see compelling EPS accretion from a potential transaction with Unilever as the company is separated from its food business and merged with McCormick.
  • Unilever said it is in talks to separate its food business and merge it with McCormick, signaling a potential strategic move that could drive value.
  • Overseas consumer staples names like McCormick, General Mills, and Conagra Brands are among the most oversold stocks as RSI readings indicate they may have fallen too far, too fast.
  • McCormick was a relative outperformer on Friday despite falling more than 7% for the week after Unilever news broke.
  • Energy companies like APA and Occidental Petroleum could see further gains alongside oil as the U.S.-Iran war continues to drive prices higher.
  • Overbought energy stocks such as Occidental Petroleum, Ciena, and Devon Energy are positioned to rise with commodity markets as geopolitical tensions persist.
  • Investors may view oversold consumer staples names as buying opportunities given their significant declines due to a fourth-week S&P 500 loss driven by external conflict.
Risk Factors
  • The S&P 500 has posted its fourth consecutive losing week due to ongoing geopolitical tensions between the U.S. and Iran.
  • Consumer staples stock McCormick is down more than 20% this month with a Relative Strength Index of 21.3, indicating it is deeply oversold.
  • Analyst Andrew Lazar warns that execution risk and majority ownership by Unilever shareholders in the potential McCormick-transaction could dampen initial investor enthusiasm despite potential EPS accretion.
  • Energy companies like Occidental Petroleum and Devon Energy are categorized as overbought with RSI readings above 70, raising concerns about a potential pullback or position paring for investors.
  • Market volatility driven by the U.S.-Iran war continues to push consumer stocks deeper into oversold territory, creating uncertainty around their stability.
Full Analysis
The S&P 500 index recorded its fourth consecutive losing week on Friday, a decline exacerbated by ongoing tensions in the Middle East involving the U.S. and Iran, which has pushed the broader market into oversold territory for several names. Analysts utilizing LSEG data identified stocks with a 14-day Relative Strength Index (RSI) below 30 combined with weekly losses of at least 5% as oversold candidates. The conflict continues to influence sector performance, with consumer staples seeing increased demand from consumers tightening their budgets while energy companies benefit from rising oil prices. Among the most significant oversold consumer names are McCormick, General Mills, and Conagra Brands. McCormick posted an RSI of 21.3, marking it as the third-most oversold stock in the S&P 500, having fallen more than 7% for the week and over 20% this month despite recent outperformance following rumors that Unilever is in talks to merge its food business with McCormick. Analyst Andrew Lazar from Evercore ISI provided an equal weight rating on McCormick, noting strategic merit but cautioning about execution risk and potential initial investor enthusiasm dampened by the valuation of a proposed deal where Unilever shareholders would hold a majority stake. General Mills and Conagra Brands are also highlighted as oversold consumer staples names. In contrast, the overbought category is dominated by energy companies driven by the geopolitical situation and oil price increases. APA Corporation recorded the highest RSI at 81.7 after rising roughly 14% for the week. Other stocks on the overbought list included Occidental Petroleum, Ciena, and Devon Energy. While the overbought status suggests potential upside alongside sustained high energy prices, analysts warn investors to consider these signals as a warning for possible position reduction. Genuine Parts was noted as having the lowest RSI among all analyzed stocks at 13.6, while Blackstone and a specific homebuilding play were also mentioned as being among this week's most oversold equities amid market volatility.