360° Coverage : Markets End First Quarter Like A Lamb But Kick Off Q2 Like A Lion

2 Updates
Markets End First Quarter Like A Lamb But Kick Off Q2 Like A Lion
Photo Credit: Forbes Business

Markets End First Quarter Like A Lamb But Kick Off Q2 Like A Lion

Apr 1 2014, 1:58pm CDT | by

After barely eking out wins for the first quarter of the year – the Dow finished with an 0.7% gain, the S&P a 1.2% return and the Nasdaq an 0.6% win – the equity markets are already off to a...

Filed under: news

 
 
 

25 weeks ago

Markets End First Quarter Like A Lamb But Kick Off Q2 Like A Lion

Apr 1 2014, 1:58pm CDT | by

After barely eking out wins for the first quarter of the year – the Dow finished with an 0.7% gain, the S&P a 1.2% return and the Nasdaq an 0.6% win – the equity markets are already off to a better start for 2014’s second quarter. Not only did the S&P hit a new high Tuesday morning, but some market insiders are predicting that the frostbite that descended upon U.S. stocks in the first quarter will thaw, allowing the bull market to continue its run.

The Institute for Supply Management said Tuesday that its index of manufacturing activity increased for the second month in a row, up to 53.7 in March from 53.2 in February. While this was below the consensus estimate of 54, figures above 50 indicate that manufacturing is growing – in other words, good news for the economy. And on this good news the S&P rose to a new intraday high of 1,884.60, and the Dow came within 30 points of its all-time intraday high. Though the indices moved off their highs as the morning wore on, all three are still solidly in the green, with the S&P UP 0.5%, the Dow up 0.36% and the Nasdaq enjoying a 1.16% gain.

Following 2013’s record-setting performance, the tepid stock growth in 2014’s first quarter – not to mention, dreadful winter weather that weighed on everything from auto sales to energy sector earnings – led some to look at the bull market’s fifth birthday and question when, not if, the run will come to an end, and whether the fall would start with a pop in the sectors that did manage to see 2013-like growth, like healthcare. “What’s interesting if you look back in time is that normally we have five year periods like this every 7 years, [and] when they coincide with a 14 year innovation cycle we end up with speculative bubble tops,” Mark Yusko, CIO of Morgan Creek Capital Management told Forbes’ Sam Sharf last month.

Jeffrey Kleintop, chief market strategist for LPL Financial, recently acknowledged some investors do fear that “a bubble in stock market valuation is again developing as investors become overly optimistic.” However, he noted, when the bull market popped in 2000, 70% of the S&P 500 industries’ total market value had price-to-earnings ratios over 30, a level that could be called “bubbly.” Today, less than 4% of the industries comprising the S&P’s market value have P/E ratios above 30.

“Looking at valuations, compared to 14 years ago, the party in the stock market may not be just getting started — but it is not yet close to being over,” Kleintop concluded.

Schaeffer’s Investment Research agrees, and recently concluded that not only is the party poised to continue, it could really rage in April in particular. “In fact, April is the top-performing month of the year over the past 40 years, going by average return,” the research firm said. “May has averaged a return of 0.67%, ranking seventh out of the 12 months, and then June is even weaker, having averaged a return of 0.39% (ranking eighth).” April, by comparison, has averaged a 1.66% comparison over the past 40 years.

Despite this trend, Tim Edwards, director of index investment strategy at S&P Dow Jones Indices, says there are several events occurring in April that investors should have their eye on, including the NATO foreign minister’s conference in Brussels, Afghanistan elections on April 5 and Indian elections on April 7. All of these events have the potential to impact the market’s performance — and given the volatility that has occurred in emerging markets thus far, impact the markets for the worse.

Likewise, Morningstar analyst Lauren Adams cautions investors from getting too greedy in this environment. “In general, we think investors should pull back on risk when enthusiasm is running high and the market’s valuation is relatively rich,” she said in a recent note. “We think the pendulum is swinging closer to the side of greed at the moment.”

Rather than buying into an already-hot sector, Adams says that investor concerns about stability in emerging markets is actually a buying opportunity for certain consumer staples stocks that are higher quality and could sustain good value despite hits from the emerging markets. “firms such as Unilever and Coca-Cola are well-positioned to capture rapidly growing demand for branded consumer products in these markets over the long run,” she says. Coca-Cola is down 0.5% for the day and down 4.9% for the year so far; in 2013 the stock posted a near-10% return. Unilever, meanwhile, is down 0.06% for the day but up 4.2% for the year; in 2013 the consumer products company gained just 4.4%.

Other good defensive moves for the second quarter and beyond, Adams added, can be found in the energy sector, which she categorized as Morningstar’s most undervalued,”with a median discount of 3% to intrinsic value for the sector.” Among the names she likes there are three oil and gas companies: Ultra Petroleum, Devon Energy and Denbury Resources. Ultra is up 24% year-to-date, Devon is up 9.4% and Denbury is up just 0.5% for the year.

Related from Forbes:

Top (And Bottom) S&P Performers Since 2009

Source: Forbes Business

 
Update
2

4 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

4 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 an ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Man dies two years after being struck by stray bullet
Santiago, Sep 30 (IANS/EFE) A 23-year-old Chilean man died after two years in a persistent vegetative state as a result of being shot in the head unintentionally by a law enforcement officer during a student protest in October 2012, his family said Monday.
 
 
Over 2,000 Germans volunteer to help battle Ebola
Addia Ababa, Sep 29 (IANS) Over 2,000 Germans have heeded the government's call to register as volunteers for deployment to fight the Ebola virus disease outbreak in Guinea, Liberia and Sierra Leone, the African Union (AU) said in a statement Monday.
 
 
India open minded, wants change, Modi tells top US executives
New York, Sep 29 (IANS) India is open-minded and wants change, Prime Minister Narendra Modi told top executives of American companies, including Google and Citigroup, during a high-powered breakfast meeting here Monday.
 
 
World hunger falls but 805 mn still chronically under-nourished: FAO
Abu Dhabi, Sep 29 (IANS/WAM) Despite the overall progress made in global hunger reduction, 805 million people are estimated to be chronically undernourished in 2012-14, down more than 100 million over the last decade, and 209 million lower than in 1990-92, the UN's Food and Agriculture Organisation (FAO) said Monday.
 
 
 

Latest from the Network

Karl Lagerfeld: Young designers have ego problem
London, Sep 30 (IANS) Fashion designer Karl Lagerfeld says that young designers have ego problems. "Most of the designers, especially the young ones, have ego problems. I couldn't care less. The label is the label and...
Read more on Celebrity Balla
 
Amanda Bynes arrested for drink-driving
Amanda Bynes was arrested for driving under the influence (DUI) yesterday morning (09.28.14). The 28-year-old actress, who sought treatment in rehab last year, was detained at 3am in San Fernando Valley after police...
Read more on Celebrity Balla
 
India, US need not be comfortable on all aspects of partnership: Modi
Washington, Sep 30 (IANS) Prime Minister Narendra Modi set the tone for his summit with US President Barack Obama Monday saying India and US should think of what they can do together for the whole world even as they...
Read more on Politics Balla
 
Hundreds of bodies found in Ukraine mass graves: Rebels
Moscow, Sep 30 (IANS/EFE) Some 400 bodies, mostly of civilians, were taken to the morgues of Donetsk and other cities in eastern Ukraine now controlled by pro-Russian rebel militias after they were retrieved from mass...
Read more on Politics Balla
 
UN chief wants earliest formation of new Afghan government
United Nations, Sep 30 (IANS) UN Secretary-General Ban Ki-moon Monday congratulated Ashraf Ghani Ahmadzai on his inauguration as the new Afghan president and called for a new Afghanistan government's formation at the...
Read more on Politics Balla
 
Hostages in Philippines plead for their lives
Manila, Sep 30 (IANS/EFE) Two German hostages held by the Philippine Islamic group Abu Sayyaf appealed for their lives Monday, urging authorities in Berlin to pay a ransom and withdraw support from the international...
Read more on Politics Balla
 
Man dies two years after being struck by stray bullet
Santiago, Sep 30 (IANS/EFE) A 23-year-old Chilean man died after two years in a persistent vegetative state as a result of being shot in the head unintentionally by a law enforcement officer during a student protest in...
Read more on Politics Balla
 
Terrorism exported to India, Indian Muslims will fail Al Qaeda: Modi
New York, Sep 30 (IANS) Terrorism has been exported to India and it is not home-grown, Prime Minister Narendra Modi said here Monday, adding that the Indian Muslims will fail the Al Qaeda. Answering a query at the...
Read more on Politics Balla
 
Avril Lavigne celebrates birthday without Chad Kroeger
Avril Lavigne celebrated her 30th birthday without her husband Chad Kroeger on Saturday (09.27.14). The 'Girlfriend' hitmaker and the Nickelback rocker, who got married 14 months ago, have fuelled more rumors their...
Read more on Celebrity Balla
 
Kim Kardashian West almost attacked again?
Kim Kardashian West was allegedly almost attacked for a second time at the weekend. The 33-year-old star's security team blocked Vitalii Sediuk, who tackled her at Paris Fashion Week last Thursday, from striking her...
Read more on Celebrity Balla