Enis’s Macro Wrap – Health Care THE Leader

by Enis October 16, 2012 7:25 am • Commentary

Health care is outperforming the broader S&P 500 for the second straight year, the first time in a decade that this has happened.  Health care is generally known to outperform in weak markets.  This year though, the sector has been a leader of a ferocious bull market rally.  Over the past couple months, technology has gradually ceded its leadership to health care.

The SPX index was up 0.8% yesterday.  Here were the stocks in the S&P top 100 that were up more than 2%:


  • MRK +2.1%
  • ABT +4%
  • C +5.5%
  • BAC +3.5%
  • BMY +2.5%
  • AMGN +2.6%
  • GS +3.6%
  • LLY +4.1%
  • LOW +3.3%
  • TXN +3.5%

Of those 10, 5 were health care.  Moreover, for large, staid health care stocks, those are some big moves.

I mentioned in a CotD post last month that I thought health care was a much better “safe” sector to park cash for yield than consumer staples (or utilities for that matter).  It is the one sector that still looks to have yield for reasonable value, whereas the other high yielders look far too expensive to me.  Unfortunately, the strong run over the last few months doesn’t provide a great setup for an entry on the long side.  But this will be the sector I’ll be looking to buy on the next pullback.

Markets overnight:

  • Asia and Europe both opened in the green after our strong afternoon session.  Asia was broadly green with the exception of India.  Europe is up almost 1%, playing catch up, as SPX futures only up 0.3% after yesterday’s run.
  • German confidence came in better than expected for the second straight quarter.  The dollar is weaker vs. most crosses, with the Euro showing the most strength, trading 1.30.
  • Commodities mostly green, but only slightly.  Treasury bonds are lower.
  • Busy economic and earnings calendar today.  CPI at 8:30 am and Industrial Production at 9:15 am the most widely watched.  GS this morning, and INTC and IBM after the close, among others.