Market Beat: Reviewing the second quarter of 2013
July 1, 2013
It has been a great year for the US stock market so far in 2013. The S&P 500 is up more than 12 percent year to date and posted a gain of 2.36 percent in the second quarter that ended June 30.
The month of June had a small decline of 1.50 percent. The Dow Jones Industrial Average has had its best start to a year since 1999 and most of the major US indexes have hit all-time highs this year.
The Dow hit its all time closing high of 15,409 on May 28. The tech heavy NASDAQ is one exception, as it's all-time high was more than 5,000 back in the year 2000 before the tech bubble burst, and it is still a long ways from an all time high price level.
It's important to remember that these all-time market highs are in nominal terms — if you adjust the market's returns for inflation, we are not near all-time high levels.
The best performing sectors year to date have been health care at 19.49 percent, followed by consumer cyclical at 16.22 percent and tech, which was just about in line with the market at 12.42 percent.
The worst performing sectors have been basic materials, which was the only major S&P sector that has had a decline this year, at minus -8.94 percent. Energy was also a poor performer, up only 1.12 percent year to date and down -3.60 percent over the second quarter.
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The year has started out very poorly for precious metals; gold has had a 12-year run of positive returns going all the way back to the year 2000. Gold has fallen about 30 percent from its all-time high set last year and had its worst one day drop in dollar terms ever on April 15, when it fell about $140 an ounce in one day.
Treasury bonds have also declined as interest rates have been rising this year. The yield on the 10-year Treasury is 2.5 percent, up from an all-time low last year of just under 1.4 percent. The yield on the 30-year Treasury bond has risen to 3.5 percent. The month of June saw record outflows from bond funds that totaled about $80 billion.
Globally, the Nikkei Index has been one of the best performing with a gain of more than 33 percent, and Latin America has been the worst, posting a decline of more than 16 percent, including a 9 percent drop last quarter.
It will be interesting to see what the second half of the year brings us after this great start to 2013.
Kenneth Roberts is a Truckee based Registered Investment Advisor. Information on his money management service can be found at his blog at http://www.sellacalloption.com or by calling 775-657-8065. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.