The S&P 500 rose by 0.51% and the Dow was up by 0.40%. There were more rumors that the Fed is going to curtail its QE program which is currently at $85 billion a month.
Financial stocks rose on this as their net interest margins would increase if this happens. Utilities and staples were back in favor today as they outpaced the market. Staples were higher by 1.0% and utilities rose by 0.95%. While the broad market averages rose again it was the safe haven areas of the market that led the way. Technology lagged the market but semiconductors were again strong as the SOX index rose by 0.97%.
Commodities were mostly lower with precious metals, copper, and grains lower while crude and natural gas were higher. Persistent fears over slowing growth in China put metals under pressure.
Financials were strong again on hopes of improving net interest margins. Morgan Stanley stood out among the major brokers. They have had analyst meetings over the past few days and the stock has reacted favorably to the sell side comments. Discount broker Charles Schwab moved out to new highs. The bank index was up by 1%. The large money center banks were in favor today.
Aerospace and defense names again led the industrial space. There was little specific news on stocks in the area. Fears of a slowdown in the space due to sequestration have proven to be unfounded and investors continue to bid the shares higher. L-3 Communications was the latest defense name to break out today. Transports continued to make new highs. Airlines were higher after the conclusion to an industry conference. Rails moved out to new highs on hopes of increased shipments and higher margins from domestic oil shipments.
Energy was weak, though natural gas traded higher by 1.25%. Solar stocks, like SunPower, were an area of strength as that area is a favorite of momentum investors.
Healthcare joined utilities and staples as another risk off area that outperformed the market. Pharma stocks were strong today after selling off recently. Pfizer, Eli Lilly, Bristol Meyers, and Johnson & Johnson all outpaced the market. Bristol was up over 5% ahead of their presentation at the American Society of Clinical Oncology meeting tonight.
Within consumer staples, Proctor & Gamble, Coca-Cola, Altria, Costco, Kellogg, and Colgate-Palmolive all worked higher. This area of the market lagged last week as investors favored cyclical names. Money definitely shifted back into total return high dividend paying stocks today.
Source: PFS Group
