U.S. Equity Market Radar (February 4, 2013)
The market ended higher for the fifth week in a row and the S&P 500 had the best January since 1989, rising 5.18 percent. Earnings have generally been well received and mutual fund flows have picked up as investors appear more confident in global economic growth.
• The telecom services sector led the way this week with AT&T and Verizon both rising by 4.4 percent. The telecom service sector has been a laggard in January and as investors look for places to put money to work this sector became a good candidate.
• Technology was also strong this week led by market heavyweights such as Apple, Dell and Qualcomm. The sector wasn’t universally strong but overall posted a good week.
• Valero Energy was the best performer in the S&P 500 this week rising 17.7 percent. The company reported a very strong quarter that handily beat expectations and prospects remain favorable.
• The consumer discretion sector was the worst performer as some homebuilders failed to live up to expectations and dragged the whole group down with them, such as Lennar and PulteGroup. Other key laggards in the sector include Time Warner Cable, Amazon and Ford.
• The materials sector also declined for the week with the chemicals complex seeing broad-based loses, with Dow Chemical and LyondellBasel pacing the losses with lackluster earnings reports.
• Constellation Brands was the worst performer in the S&P 500 this week losing 15.1 percent. The company was involved in the Anheuser-Busch InBev’s acquisition of Grupo Model which antitrust authorities now oppose.
• Earnings will begin to wind down next week but there are still notable names that will report including Walt Disney, CVS Caremark, Allstate and Visa.
• After the best January in more than 20 years a pullback would almost be expected.
Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., and a Toronto, Canada native, which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure. The company’s funds have earned more than two dozen Lipper Fund Awards and certificates since 2000. The Global Resources Fund (PSPFX) was Lipper’s top-performing global natural resources fund in 2010. In 2009, the World Precious Minerals Fund (UNWPX) was Lipper’s top-performing gold fund, the second time in four years for that achievement. In addition, both funds received 2007 and 2008 Lipper Fund Awards as the best overall funds in their respective categories. Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a leading publication for the global resources industry, and he is co-author of “The Goldwatcher: Demystifying Gold Investing.” He is also an advisor to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies. Mr. Holmes is a much-sought-after conference speaker and a regular commentator on financial television. He has been profiled by Fortune, Barron’s, The Financial Times and other publications.
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