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


29 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


7 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) and slashing the workforce of 20,000 by 3 ...
Source: Business Times Singapore   Full article at: Business Times Singapore


7 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 trag ...
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

Ukraine lacks sufficient gas for winter
Kiev, Oct 23 (IANS) Ukrainian Prime Minister Arseny Yatsenyuk has said his country lacks sufficient natural gas for winter.
Obama 'cautiously optimistic' about Ebola
Washington, Oct 23 (IANS) President Barack Obama Wednesday said he is "cautiously optimistic" about the Ebola situation in the US, as his government announced a new programme that will actively monitor for 21 days every person coming from West African nations hit by the deadly virus.
Khamenei wants less reliance on oil
Tehran, Oct 23 (IANS) Iran's Supreme Leader Ayatollah Ali Khamenei called on the country's officials Wednesday to formulate plans to cut Iran's dependence on oil revenues and manage the economy on the basis of the domestic capabilities.
Nigerian parliament approves $1 bn loan to fight Boko Haram
Lagos, Oct 23 (IANS) The Nigerian House of Representatives Wednesday approved President Goodluck Jonathan's request to borrow not more than one billion dollars to tackle the security challenges facing the country.

Latest from the Network

European Champions League standings
Paris, Oct 22 (IANS) Following are the European Champions League standings for Groups E to H after Tuesday's matches (tabulated under matches played, won, drawn, lost, goals for, against, points), according to Xinhua...
Read more on Sport Balla
Rogerio set to break Giggs world record
Rio de Janeiro, Oct 22 (IANS) Sao Paulo goalkeeper Rogerio Ceni is one victory away from earning his fourth Guinness World Record by eclipsing a mark held by Manchester United legend Ryan Giggs. The 41-year-old will...
Read more on Sport Balla
Ryan Reynolds can't keep his hands off Blake Lively
Ryan Reynolds was ''really sweet'' to Blake Lively at the Angel City Ball. The couple, who got married in September 2012, made their first red carpet appearance together in New York City on Monday night (10.20.14) since...
Read more on Celebrity Balla
Kris Jenner doesn't know who Bruce Jenner is dating
Kris Jenner has ''no idea'' whether Bruce Jenner is dating her best friend. The 58-year-old reality TV star, who split from the Olympic gold medallist last October after 23 years of marriage, claims she doesn't know if...
Read more on Celebrity Balla
When Rihanna dressed like 'Harry Potter'
New York, Oct 22 (IANS) Singer Rihanna was spotted here in a Harry Potter style costume. She wore the wizard-like get-up while heading for a business meal here Monday, reports mirror.co.uk. The 26-year-old combined a...
Read more on Celebrity Balla
Germany raises humanitarian aid to Iraq
Berlin, Oct 22 (IANS) Germany has pledged a further 20 million euros (about 25.5 million dollars) in humanitarian aid to Iraq, the foreign ministry said in a statement Tuesday. The additional funds are immediately...
Read more on Politics Balla
India calls on Israel, Palestine to resume peace process
United Nations, Oct 22 (IANS) India has called upon Israelis and Palestinians to resume the peace process as "dialogue remains the only viable option" to address the issues confronting the region. In a brief statement...
Read more on Politics Balla
Airstrikes help ground forces fight IS: Pentagon
Washington, Oct 22 (IANS) Kurdish forces are in control of the majority of the Syrian city of Kobane despite efforts by the Islamic State (IS) to take the town, a spokesperson for US defence department said Tuesday....
Read more on Politics Balla
Palestine, Israel urged at UN to halt unilateral initiatives
United Nations, Oct 22 (IANS) UN Secretary-General Ban Ki- moon Tuesday called on Palestine and Israel to overcome differences and halt unilateral initiatives that fuel mistrust, so as to pursue long-term stability in...
Read more on Politics Balla
China urges Israel to create conditions for peace
United Nations, Oct 22 (IANS) Chinese government has called on Israel to create necessary conditions for the resumption of peace talks with Palestine. At an open debate of the Security Council on the situation of the...
Read more on Politics Balla