Weekly Investor – February 4, 2013
Momentum Continues
Market Summary:
The U.S. equity markets continued their upward climb and ended last week in positive territory. The S&P 500® Index was positive for the fifth straight week in a row and has returned 6.2% YTD. The markets fluctuated last week as they absorbed mixed economic reports and earnings season continued. Positive earnings reports helped push the markets up 0.5% on Tuesday while a statement by the FOMC that economic growth has stalled brought markets down on Wednesday. Thursday also closed down as US initial jobless claims came in higher than expected. However, Friday’s positive employment data helped significantly and all indices ended the week in positive territory. Investors look forward to this week and hope for more good news out of Corporate America.
The S&P 500® closed up 0.7% for the week. The top-performing sectors in the S&P 500® Index included Telecommunications (3.6%) and Technology (1.2%), while bottom-performing sectors included Basic Materials (-0.6%) and Consumer Discretionary (-0.9%). In the fixed-income market, the 10-year Treasury yield closed even for the week at 2.0%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Favorable Odds
JP Morgan Chase & Co. (JPM) is a financial holding company that provides various financial services worldwide. Founded in 1823 and headquartered in New York, New York, JPM operates it business in several segments including investment banking, commercial banking, asset management services, retail finance services, as well as credit card and auto services.
JPM emerged from the financial crisis as one of the few financial institutions with a solid balance sheet. JPM demonstrated its superior financial position by passing the Federal Reserve stress tests and also obtaining approval to buyback shares and increase its dividend. Despite the headwinds of a low interest rate environment and a more onerous regulatory landscape, JPM is poised to gain market share as its weaker peers consolidate their businesses to improve their balance sheets. We believe JPM has the potential to significantly surprise on the upside as economic conditions continue to improve for the banking industry. For these reasons we have added JPM to our portfolio and believe it represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.2% |
| Lowes Cos. | 4.4% |
| CBS Corp. | 4.1% |
| Danaher Corp. | 3.9% |
| Allstate | 3.9% |
| Qualcomm Inc. | 3.9% |
| Ebay, Inc. | 3.8% |
| SunTrust Banks, Inc. | 3.7% |
| Forest Laboratories | 3.4% |
| Gilead Sciences | 3.3% |
U.S. Equity Indices
| Index | 02/01/13 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 14,009.8 | 0.8% | 6.9% |
| NASDAQ | 3,179.1 | 0.9% | 5.3% |
| S&P 500 | 1,513.2 | 0.7% | 6.1% |
| Russell 1000 G | 693.1 | 0.6% | 5.3% |
U.S. Credit Rates
| Index | 02/01/13 | 01/25/13 | 12/30/11 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 0.9% | 0.9% | 0.8% |
| 10 Year T-Note | 2.0% | 2.0% | 1.8% |
| 30 Year T-Bond | 3.2% | 3.1% | 3.0% |
| Prime Rate | 3.3% | 3.3% | 3.3% |
This newsletter presents selected recommendations from portfolio managers of Argent Capital Management LLC, a registered investment advisor. Opinions reflect the portfolio manager’s judgment on the date above and are subject to change. A list of stocks recommended by Argent is available upon request. You should not assume that these recommendations are or will be profitable. In the course of it’s business, Argent’s client accounts may be buying and selling these stocks.
