Earnings Tide Turning Higher
Yesterday, all sectors of the S&P 500 were higher, and most have remained higher for the year. For the most part, the market has been spinning its wheels. Energy has come on strong with the rebound in crude oil while utilities are still outpacing the broad market. There was a time this year when that sector was up more than 20%.
I suspect if the major indices break out to new highs, we’ll see more rotation out of the safety of utilities.
One winner in that rotation would be consumer discretionary names.
Ironically, the consumer discretionary names that set the pace were up because of consumers from outside the United States. Harley-Davidson (HOG) soared 10% and Netflix soared (NFLX) 20%. Overall, it feels like the earnings tide is turning higher. Perhaps this will be the inflection point that puts the breaks on the slide, which began after earnings topped out at an all-time high in the fourth quarter 2014.
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