Lots of discussion over the weekend about the one-month anniversary of the Great Turnaround, that day on Feb. 11 when everything—stocks, commodities, the dollar—reversed.
The good news is that the most beaten-up sectors — energy, materials, and financials — have had the biggest moves:
Sectors since 2/11
- Energy: 13.7 percent
- Materials: 13.9 percent
- Financials: 14.1 percent
- Consumer discretionary: 12.5 percent
- Tech: 11 percent
- Health care: 10.5 percent
- Telecommunications: 6.9 percent
- Consumer staples: 5.9 percent
- Utilities: 5 percent
What’s more interesting is that the most defensive sectors — utilities and telecommunications — continue to post gains and are far and away the biggest gainers this quarter. Nothing else even comes close, despite the big rallies in the last month:
Sectors Leaders YTD
- Telecom: up 12.3 percent
- Utilities: up 10.4 percent
- Consumer staples: up 3.3 percent
- Energy: up 3.0 percent
- Materials: up 1.7 percent
I certainly get the case for utilities:
1) Less vulnerable to the economy
2) Dividend yields near 4 percent at a time of low interest rates
3) Consistent dividend growth rate of around 5 percent
4) Low coal and natural gas prices reduces need to raise prices to customers.
The problem I have with utilities is that they do not historically make for great leadership in the overall market.
It’s fairly rare that utilities are a leader, particularly in the first quarter of the year.
According to Kensho, since 1990 there have only been five first quarters where Utilities were #1 or #2 sector performers.
In those five years, the S&P 500 was positive 80 percent of the time for the full year. The median return for the full year during those periods has been a mediocre 3.4 percent.
Not exactly inspiring.
Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.