Weekly Investor – June 9, 2014
Equity Momentum Continues
Market Summary:
U.S. equities posted gains last week and once again the S&P 500® Index reached new heights on four out of five trading days. Further stimulus efforts by the European Central Bank (ECB) to fight disinflation and weak projected growth boosted investor confidence and equity markets. The ECB created the first ever negative interest rate of 0.1% annually on bank reserves. In other words, banks must pay the ECB to hold excess reserves. In U.S. economic news, equities initially sold-off after an incorrect ISM Manufacturing report but quickly recovered as the correct report showed a strong expansion. Additionally, non-farm payrolls and May total vehicle sales both beat expectations. Looking ahead, investors will pay close attention to further global stimulus measures and hope for continued momentum in U.S. equities.
The S&P 500® was up 1.3% for the week. The top-performing sectors in the S&P 500® Index included Financials (2.3%) and Industrials (2.2%), while bottom-performing sectors included Consumer Staples (0.3%) and Telecommunications (-1.2%). In the fixed-income market, the 10-year Treasury yield was up during the week, ending at 2.6%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Emerging Market Growth
Skyworks Solutions, Inc. (SWKS) provides analog semiconductors worldwide. Founded in 1962 and headquartered in Woburn, MA, SWKS products support automotive, broadband, cellular infrastructure, energy management as well as smartphone and tablet applications.
We believe SWKS is currently positioned to benefit from the growth of the low-end smartphone market, specifically in emerging markets. Lower-end or cheaper smartphones require integrated chipset solutions, an area where SWKS specializes. Additionally, SWKS is expanding beyond their traditional smartphone market into connected home and automotive applications. For these reasons, we have added SWKS to our portfolio as we believe the company has the potential to grow sales and increase margins at a higher level than currently expected.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.8% |
| CBS Corp. | 4.4% |
| Danaher Corp. | 4.0% |
| Suntrust Banks, Inc. | 3.9% |
| The Dow Chemical Co. | 3.7% |
| Electronic Arts, Inc. | 3.6% |
| Qualcomm Inc. | 3.5% |
| Schlumberger LTD | 3.5% |
| Oracle Corp. | 3.5% |
| Lincoln National | 3.5% |
U.S. Equity Indices
| Index | 06/06/14 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 16,924.3 | 1.2% | 2.1% |
| NASDAQ | 4,321.4 | 1.9% | 3.5% |
| S&P 500 | 1,949.4 | 1.3% | 5.5% |
| Russell 1000 G | 906.0 | 1.3% | 4.9% |
U.S. Credit Rates
| Index | 06/06/14 | 05/30/14 | 12/31/13 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.6% | 1.5% | 1.8% |
| 10 Year T-Note | 2.6% | 2.5% | 3.0% |
| 30 Year T-Bond | 3.4% | 3.3% | 4.0% |
| 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.
