Last week was the first good one for the stock market in quite a while. The S&P 500 rose 6.6%, with two of the index’s most depressed sectors this year outperforming for a change: Consumer Discretionary (9.2%) and Information Technology (8.1%). Nevertheless, the best-performing sector this year so far has been Energy, and it was up 8.1% last week too. Financials (8.0%) was the fourth of the four sectors to outperform the S&P 500 last week. We continue to recommend overweighting Energy, Financials, and Information Technology (focusing on companies with profits!).
On Friday, the S&P 500 was down 13.4% since its record high on January 3, while the S&P 500 equal-weighted index was down only 7.7%. That suggests that the corrections of a few stocks—the “MegaCap-8” tech-related stocks—played an oversized role in the index’s drop from the peak.
