Home' Trinidad and Tobago Guardian : January 10th 2014 Contents A22
Guardian www.guardian.co.tt Friday, January 10, 2014
NEW YORK---The stock market s
bearish beginning to 2014 stands
in stark contrast to its surge out
of the gate last year.
As of Wednesday, the fifth trad-
ing day of the year, the Standard
& Poor's 500 index was down 0.6
per cent for 2014, after falling four
of the five days. A year ago, the
index had climbed 2.2 per cent,
getting a boost after lawmakers
passed a bill to avoid government
spending cuts and tax increases.
Stocks also got a lift after the gov-
ernment reported that hiring held
up.The index built on that strong
start and climbed almost 30 per
cent for the year. But after ending
2013 at a record high, it has stum-
Stocks that ended last year
poorly are leading the decline so
far. Telecoms, consumer staples
and utilities all lagged the overall
market in the last month of 2013.
While these stocks pay big div-
idends, their growth prospects are
limited and investors are ditching
them in favour of stocks that will
should benefit as the economy
"I don't think we should be too
concerned," about the early slump,
says David Kelly, chief global
strategist at JPMorgan funds.
"There's a certain amount of rebal-
ancing going on, which is com-
pletely appropriate after the big
year that we've seen."
Five days may not make a year,
but by some measures, the weak
start is a bad omen for the mar-
The Stock Trader's Almanac says
that if the S&P 500 rises during
the first five days, the index has
an 85 per cent chance of ending
the year higher, based on 40 years
The last time the index fell over
that stretch was in 2008---when
the S&P 500 slipped 5.3 per cent
---as the stock market reeled in the
aftermath of the financial crisis.
The index ended the year 38.5 per
cent lower as the Great Recession
Others prefer to give the market
more time before assessing a trend.
As goes January, so goes the year,
is the classic Wall Street adage.
By that analysis, the stock mar-
ket's performance for all of January
signals how the stock market will
perform for the year. The January
barometer has been right for 62
or the last 85 years, or 72.9 per
cent of the time, according to
Howard Silverblatt, a senior index
analyst at S&P Dow Jones Indices.
Phone companies have sagged
the most in the S&P 500 so far in
2014, dropping two per cent. Con-
sumer staples, a group that
includes grocers, brewers and
tobacco stocks, are the second-
worst performers, dropping 1.9 per
cent. These high-dividend paying
stocks were in demand when bond
yields were low.
Now that 10-year Treasury
yields have surged from a 2013 low
of 1.63 per cent last spring to nearly
three per cent, these high-dividend
stocks are less attractive in com-
parison. An investor looking for
steady income will typically favour
bonds over stocks because they
are less risky.
The only two sectors that have
advanced this year are health care
stocks, which have risen 1.2 per
cent, and financial companies,
which are up 0.6 per cent.
Still, despite the market's slow
start, many analysts say it's too
early to be down on stocks, par-
ticularly since the S&P 500 index
jumped 2.1 per cent the last two
weeks of 2013.
Instead, analysts are focusing
on the improving outlook for the
economy and company earnings,
as well as the future of the Federal
Reserve's stimulus programme.
And those factors, which helped
drive last year's rally in stocks,
appear to be in place.
"I'd be much more worried if it
hadn't rallied in the last couple of
weeks in December," said John
Manley, chief equity strategist at
Wells Fargo Fund Management.
"The basic fundamentals are still
Investors will get a key insight
into the strength of the economy
on Friday, when the government
publishes its monthly jobs report
for December. Another strong
report, confirming that hiring is
still picking up, could help stir the
stock market from its malaise.
Another catalyst could be
fourth-quarter earnings reports.
Analysts predict that S&P 500
companies will report that earnings
grew 5.8 per cent for the period,
according to S&P Capital IQ. That
would be the fastest rate of growth
since the fourth quarter of 2012.
Before they rush to sell, investors
should also know that the Stock
Trader's Almanac study of the first
five days has a caveat.
In midterm election years---like
2014---the indicator has a "spotty
record," according to the publisher.
In fact, it's almost a contrary indi-
cator, with only two of the last
nine midterm years following the
trend. That means a poor start
could lead to a good year. (AP)
in new year
Specialist Michael Shearin, foreground centre, works at his post on the floor of the New York Stock Exchange.
Links Archive January 9th 2014 January 11th 2014 Navigation Previous Page Next Page