Weekly Investor – May 27, 2014
Fed Comments Boost Equity Markets
Market Summary:
U.S. equities ended the week in positive territory and the S&P 500 Index closed above 1,900 for the first time on Friday. Minutes released by the Federal Reserve were the main driver of equity market success. On Wednesday, Fed policy makers commented that further stimulus measures don’t necessarily risk igniting a higher inflation rate. This statement reassured investors and drove markets higher. Additionally, economic data was mixed for the week. The U.S. PMI index showed strong growth in output and U.S. new home sales showed an increase for the first time this year. However, initial jobless claims came in higher-than-expected and a number of retailers reported lackluster earnings due to the harsh winter. Looking ahead, investors hope for growth from Corporate America and the continuation of the current low interest rate environment.
The S&P 500® was up 1.2% for the week. The top-performing sectors in the S&P 500® Index included Technology (2.2%) and Consumer Discretionary (2.1%), while bottom-performing sectors included Utilities (-0.9%) and Telecommunications (-1.2%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.5%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Favorable Odds
Quanta Services, Inc. provides specialty contracting services primarily in North America. Founded in 1997 and headquartered in Houston, Texas, PWR designs, installs and maintains electric power transmission and distribution networks for the electric power industry; designs, installs and maintains natural gas and oil transmission and distribution systems for the natural gas industry; and designs, installs and maintains fiber optic, copper, coaxial cable and wireless communications networks for communications carriers.
As the largest utility contractor in the United States, PWR is benefiting from government incentives to rebuild the electricity grid after years of under-investment. In addition, PWR’s pipeline construction business is benefiting from the need to move recently discovered shale gas and oil around the country. With the combination of accelerating earnings growth and the stock trading below its historical valuation, we believe that PWR offers favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 5.8% |
| CBS Corp. | 4.5% |
|
Danaher Corp. |
4.0% |
| Suntrust Banks, Inc. | 3.8% |
| The Dow Chemical Co. | 3.6% |
| Electronic Arts, Inc. | 3.6% |
| Qualcomm Inc. | 3.6% |
| Oracle Corp. | 3.6% |
| Forest Labortories | 3.5% |
| Schlumberger LTD | 3.4% |
U.S. Equity Indices
| Index | 05/23/14 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 16,606.3 | 0.7% | 0..2% |
| NASDAQ | 4,185.8 |
2.3% |
0.2% |
| S&P 500 | 1,900.5 | 1.2% | 2.8% |
| Russell 1000 G | 883.6 |
1.5% |
2.3% |
U.S. Credit Rates
| Index | 05/23/14 | 05/16/14 | 12/31/13 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.5% | 1.6% | 1.8% |
| 10 Year T-Note | 2.5% | 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.
