The S&P 500 soared by 1.27% and the Dow roared ahead by 1.26%. Better economic data, positive commentary from Fed Chairman Bernanke and dovish comments from ECB leader Draghi spurred the bulls on. There were fears at the start of the week that accommodative action from our Fed would end sooner rather than later. Those fears have been largely put to rest over the past few days on continued dovish comments from the central bank here and in Europe.
In a little over a week the S&P 500 saw a pullback of close to 3% and now a rally of roughly 2%. The fears brought on by issues with the Italian election on Monday have already moved to the back burner. A deadlocked Italian parliament is not a reason for a sustained decline in the market. Over the next few days sequestration will be the latest issue to confront market participants.
Homebuilders, retail, transports and material stocks led the market today. Staples, utilities and telecom also rose, but failed to keep pace with the market. Homebuilders moved higher after strong pending home sales data was released. Rails drove the transports higher. The Dow Jones Transportation Index rose by 2.9% today. Rails, parcels and truckers were all up across the board. Steel stocks were the leadership group in the materials space. Steel companies are effectively putting in price hikes.
Financials rallied by 1.6% today. The bank index rose by 1.4% and the insurance group saw a 1.7% spike. REIT’s, the safe haven in the financial sector, lagged the overall sector.
Capital equipment was a leading group in the industrial sector. Joy Global’s earnings report was favorably received and had a positive impact on the area. Eaton and Cummins Engine were strong performers in the engine makers area. Boeing was a leader in the aerospace/defense space.
Homebuilders were helped by the pending home sales data and favorable earnings guidance from Whirlpool. Leading names in the space traded higher by 2%-3%.
Railroad stocks again provided leadership in the transportation space. Kansas City Southern was up 5.75%. Bellwether U.S. and Canadian rails were up across the board. UAL and Delta led the airlines group which had an increase of 3% on the day.
Energy performed in line with the broad market. Oil service companies, integrated energy names and the drillers were all strong. Refiners continue to move higher on strong margins ahead of the summer driving season.
Consumer discretionary outperformed consumer staple names. Retailers moved higher after Wal-Mart and other large retailers said they saw improving sales trends in the last few weeks of February. Staple stocks moved higher but trailed the overall market.
Source: PFS Group
