Hot Stocks and Those That are Not

Market Update, 2020-02-17. Tech stocks were hot as equity markets rallied again last week. And the S&P 500 ended at 3380 on the back of Friday’s “payday” savings flows. 10-year Treasury yields are down about 20 bps since mid-January. And oil is off almost $10 year to date.

In the middle of last week, the Federal Reserve stuck to its script before Congress: slow and steady is the economy.

Year-to-date hot and not

What’s “hot” and what’s not so far in 2020:

Hot: Technology and other “growth at any price” themes. The tech sector continues to steer this bull market. This sector is up 11% on the year, leading the S&P 500. Nasdaq is the top major index on the leader board. Boring stocks, as the team at OHFG previewed weeks ago, have been non-boringly hot since mid-January when interest rates started rallying. This has allowed utilities, areas of consumer discretionary, and REITs to post strong returns. Bitcoin has also been fabulous year to date.hot stocks

Fair: Small caps. Strength in equities has been concentrated in the ultra-large caps. S&P 500 large caps are up 5% on the year, while small caps are about flat. The market cap of the entire small-cap Russell 2000 is about $2.4 trillion. By comparison, the market cap for Microsoft and Apple is $2.8 billion, combined. Low bond yields have caused bank financials to slow their torrid Q4 2019 pace.

Cold:  U.S. energy stocks are the biggest laggards. Concern over the Covid-19 impact on China’s demand and the industrial supply chain have pulled down prices for oil and most base metals.  European stocks have been cold due to strength in the US dollar and low growth caused by a slowing China trade. Base metals and commodities outside of lumber have been cold.

Resources

  • We invite readers to sign up for our next Investing 101 Class: “Taming the Emotional Investor,” with special guest speaker Weston Wellington from Dimensional Fund Advisors on February 21, 2020, at 10 A.M. Register at www.oakharvestfg.com/retirement-class, or call or text “INVESTCLASS” to 281-822-1350.
  • Find more information and help on our YouTube Channel.

 

Weekly market updates contain general information and expresses views of Oak Harvest Investment Services. Data, Articles, and information cited are believed to be reliable at the time of creation, but is not guaranteed.  Content should not be regarded as personalized investment advice.  Views and opinions expressed may change without notice and do not constitute a recommendation, or an offer or solicitation to buy or sell securities. In addition, Oak Harvest makes no assurance as to the accuracy of any forecast made. Past performance is not indicative of future results. Investing involves the risk of loss.