The S&P 500 ETF
(NYSEARCA:SPY) turned 20 this week, as the index rose about 1%, in large part due to a 1% gain on Friday. The Equal Weight S&P ETF
(NYSEARCA:RSP) slightly outperformed, gaining almost 1.2% for the week. Market volatility returned as mixed to slightly negative economic data reintroduced doubts about the strength and sustainability of the economic recovery. Through midday Friday, just under half of the companies within the S&P 500
(INDEXSP:.INX) have reported earnings; of these, 69% have beaten EPS expectations, while 64% have beaten revenue forecasts.
Energy is the only sector within the S&P to have exceeded both revenue and EPS estimates for the fourth quarter. Momentum oriented investors should reposition their portfolios to reflect this strength. Continued rotation into material and industrial names, as well as equal weight indexes, is still appropriate. Headwinds are likely to materialize in February, thus March dated hedging is advisable.
Next week's market-moving events:
Monday: The 10:00 am. ET factory order report could prove meaningful, especially in light of the weak December GDP report. Clorox (NYSE:CLX), Leggett & Platt (NYSE:LEG), Sysco (NYSE:SYY), and Yum Brands (NYSE:YUM) report earnings.
Tuesday: The ISM non-manufacturing report will be in focus.
Wednesday: CVS (NYSE:CVS), Penske Auto (NYSE:PAG), Visa (NYSE:V), and Ralph Lauren (NYSE:RL) report today, giving investors a broad view of economic activity.
Thursday: Jobless claims will hit the tape at 8:30 a.m. ET, while consumer credit figures will be released at 3:00 p.m. ET.
Follow Oliver Pursche on Twitter: @opursche.
Friday: Over 200 companies will release earnings today, including Moody’s (NYSE:MCO) and Entergy (NYSE:ETR). But I expect the 8:30 a.m. ET International Trade Report to be the most meaningful event of the day.
No positions in stocks mentioned.