U.S. Equity Market Radar (October 28, 2013)

U.S. Equity Market Radar (October 28, 2013)

The S&P 500 moved to a new high this week as overall earnings were well received. The internal market rotation that began in earnest last week continued this week as utilities, telecom and staples were among the best performers and many cyclical areas lagged.

Domestic Equity Market - U.S. Global Investors
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  • The industrials sector was the best performer this week as the transport names were among the sector leaders. Norfolk Southern, Boeing, Southwest Airlines, Kansas City Southern and Delta Air Lines all outperformed.
  • The utilities sector also rallied this week with broad based participation as interest rate sensitive areas outperform.
  • Corning Inc. was the best performer in the S&P 500 this week rising 15.67 percent. The company announced it is buying Samsung Electronics’ stake in their LCD panel joint venture in exchange for a 7.4 percent stake in Corning.


  • The financials sector was the worst performing group this week. JP Morgan and Bank of America lagged due to government settlements and jury awards primarily related to mortgages. Several large regional banks also broadly underperformed on weaker than expected earnings.
  • The energy sector also lagged as Cameron International and FMC Technologies were the two worst performers in the S&P 500 this week on poor earnings results.
  • There were numerous companies posting double digit declines this week due to poor earnings including, Symantec, Akamai Technologies, Altera, Xerox and Juniper Networks.


  • 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 potentially large.
  • The debt ceiling and government shutdown has passed, but the economic fallout will likely be felt over the next weeks and months as it negatively affects upcoming economic data releases.
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