The S&P 500 closed up 0.78% and the Dow was higher by 0.91%. Higher beta stocks outperformed safety and the advance was broad based today. The most frequently cited “reason” for the advance was that the Fed Chairman was going to not be hawkish regarding QE tomorrow. (As to how anyone would “know” what he is going to say?) Investors in bonds and commodities will look for greater clarity in hopes of reducing some of the volatility they have experienced recently.
Telecom, media, rails, managed care, semiconductors, and industrials were all strong. Telecom was particularly strong late in the day. AT&T rose by more than 1%. The regional bells were strong as was the tower space. Media was driven by strength in News Corp, Disney, and CBS. Disney sold off aggressively a few weeks ago and buyers have aggressively bought the shares over the past few days. Intel continued to lead the semiconductor group. United Health broke out to a new 52-week high as managed care names worked higher.
Financials were a leading group in the morning session but gave back some of their gains in the final few hours of trading. Discount brokers led the sector. E*Trade and Charles Schwab broke out above resistance in this group. Asset managers were stronger as trading volumes and assets under management figures are moving higher. The large broker dealers were the weakest group in the sector.
Large tech stocks for the Nifty 50 era and the go-go 90’s were back in the headlines today. Xerox spiked to a new high on heavy volume. Restructuring efforts are paying off for the old tech titan. Intel, Cisco, IBM, and EMC were all strong today as investors favored large company tech stocks.
General Electric moved higher by 2.5% and closed at a 4 ½ year high. There was no news associated with the stock today. MMM and other old line industrials were strong today. Investors bet today that second half growth rates will be stronger than the first six months. Cyclical, high beta names did well. Transports traded off yesterday and reversed that action today. The rails were strong. FedEx was volatile ahead of its earnings release tomorrow. The stock was up near 2% but gave back much of its gains by the close. Can lower fuel costs offset weakness in Europe for FedEx? They report prior to the open tomorrow.
Large media names were strong today. There have been several major content deals announced over the past few weeks. There is definitely heightened interest in media right now. Time Warner, CBS, Disney, and News Corp all traded up by at 1%. Pure content names were bought on the hopes there will be deals announced with distributors.
Consumer discretionary outperformed staples. Dollar stores moved higher again. Jack in the Box moved higher and led the restaurant group. Autos and auto parts suppliers also had a strong day.
Source: PFS Group
