With the SPX index testing 1500 again, up 5% to start 2013, I took a quick look at which sectors are leading the rally. Here is the year-to-date chart for all the major sector ETFs:
Most sectors are up between 6 and 7%, led by energy, health care, industrials, financials, and consumer discretionary. The obvious laggard is XLK, the technology ETF, up only 1.5% to start the year. AAPL has been a major drag on XLK given its 15% weighting in the ETF. But T, VZ, and INTC have also weighed on the tech ETF.
In contrast, almost every major energy stock is up strongly to start 2013. Energy lagged in 2012 as oil prices stagnated, but the energy sector is cheap from a valuation perspective vs. the rest of the market. Health care is the other sector where valuations are still relatively inexpensive, and it’s the second best performer to start 2013.
Portfolio managers have been shifting their overweight tech positions into other sectors in the past 6 months. Even within tech though, they’ve shifted their exposure from AAPL into the large internet names, as names like GOOG, AMZN, and EBAY trade near all-time highs.
Markets overnight:
- Japan was up almost 3% while the rest of Asia was mixed. Japan has been the major outperformer in Asia to start 2013, while Taiwan and Korea actually lower in 2013.
- Europe opened strong after the ECB said banks will repay more LTRO loans back to the central bank than expected. Europe up almost 1%. SPX futures up 0.4% in sympathy.
- The Euro is near 1 year highs vs. the dollar, at 1.3465, while the yen and commodity currencies are falling again (AUD and CAD). Treasury bonds down sharply ahead of next week’s FOMC meeting.
- Strong earnings from PG, HAL, and WY this morning, all up 2-4%. New Home Sales data released at 10 am.