Last year’s dogs are leading the pack …but the year is young
The equity market was up almost 1% last week as measured by the Standard & Poor’s 500 Index (S&P 500) and leading the pack were some of 2011’s most badly beaten sectors of the economy: Materials +4%, Financials + 3.1% and Industrials +2.6%. A couple of weeks do not make a trend – however, so far, the last continue to be first. Cantor Fitzgerald U.S. Market Strategist, Marc Pado, attributes the market move to institutions reallocating their portfolios and reducing their underweight positions. For the week, the Dow Jones Industrial Average (DJIA) rose 0.5% to 12,422, the S&P 500 rose 0.88% to 1,298 and the Nasdaq Composite Index rose 1.4% to 2,711. The Russell 2000 Index, which tracks the performance of small capitalization stocks, rose 1.87% to 764.
As earning season continues, the U.S. markets are near a five-month high and European stocks posted their fourth consecutive winning week. The positive market sentiment was confirmed by the Fed’s Beige Book Survey which said the economy “expanded at a modest to moderate pace” in its most recent measurement period. Separately, the University of Michigan index of consumer sentiment beat expectations for January to rise to its highest level in eight months. We remain watchful and guardedly optimistic as Europe continues to work through their debt challenges and, as expected, Standard & Poor’s has notified France and Austria that it will lower its rating on the countries’ sovereign debt one notch – from AAA to AA+. We anticipate that other European countries will be slapped with downgrades in the coming days; however, Germany will most likely maintain their AAA status.
It’s the middle of January; the S&P 500 is up 2.5%….. but the year is young. Please call us for help or if you have any questions.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 is an unmanaged index generally comprised of companies with lower price-to-book ratios and lower forecasted growth values.
David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
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