U.S. Equity Market Radar (November 11, 2013)

The S&P 500 ended the week strong, pushing into positive territory for the week. A strong employment report on Friday was the positive catalyst after a see-saw week with lots of conflicting signals. Cyclicals and financials led the way on improving growth prospects.

Domestic Equity Market - U.S. Global Investors
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  • The materials sector was the best performer this week on broadly improving global macro environment. US Steel, Newmont Mining and Vulcan Materials led the way in a broad-based rally.
  • The financials sector was also strong this week as insurance stocks such as Prudential Financial, Lincoln National and MetLife rallied after the strong employment report pushed bond yields higher, with the prospect that higher yields will boost investment income is positive.
  • The Gap was the best performer in the S&P 500 this week, rising 12.64 percent. The company reported earnings that beat expectations and same store sales trends in October that remained positive.


  • The telecom services sector was the worst performing group this week as AT&T fell by nearly 3 percent on news that T-Mobile reported 643,000 postpaid subscriber additions, while AT&T lost 25,000 subscribers.
  • The utilities sector also lagged as interest rate sensitive groups were generally under pressure.
  • WPX Energy was the worst performer in the S&P 500 this week, falling 14.74 percent. The oil and gas exploration company fell after posting a significantly larger loss than expected on lower realized prices on natural gas.


  • The current macro environment remains positive as economic data remains robust enough to give investors confidence in an economic recovery, but not too strong as to force the Fed to change course in the near term.
  • Money flows are likely to find their way into domestic U.S. equities and out of bonds and emerging markets.
  • The improving macro backdrop out of Europe and China could be the catalyst for a rally into year end.


  • A market consolidation could occur in the near term after such a strong year.
  • Higher interest rates are a threat for the whole economy. The Fed must walk a fine line and the potential for policy error is large.

About the author

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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