The last year has been a very solid one for the U.S. stock market. In 2012, the Dow Jones Industrial Average rose a little better than 7 percent. The S&P 500 climbed more than 13 percent and the NASDAQ notched a gain of nearly 16 percent. Overall, the year was better than the historical average for the market and equities continued their steady gains ever since the March 2009 stock market bottom.
The top three sectors of the year were financials, consumer discretionary, and transportation. The worst performing sectors were consumer staples, energy, and utilities. The performances of the these sectors underscores the fact that investors were looking to take on risk in 2012 with high beta sectors such like financials and consumer discretionary doing well while lower beta sectors such as consumer staples and utilities underperforming. In fact, the only major sector to fall during the year was utilities which lost around 3.50 percent.
Financials were far and away the best market sector, notching a gain of more than 23 percent. Money center banks, many of which had a very difficult 2011, led the way for much of the year. The most notable standout was Bank of America (NYSE:BAC) which bounced back with a gain of nearly 109 percent. Citigroup (NYSE:C) was also a big winner, rising over 50 percent in 2012.
One of the keys to the market’s strong performance on the year was the receding focus on the European sovereign debt crisis. The trend over the last several years has been for stocks to do very well when the problems in Europe are put on the back burner and alternatively sell-off when the sovereign fears take over the headlines.
In the second part of 2012, European banks posted solid gains which was a tell for the broader market. Over the last 52-weeks, including the start of 2012, shares of Deutsche Bank (NYSE:DB) and Barclays (NYSE:BCS) are up roughly 34 percent and 56 percent, respectively. Swiss banks have also done well with Credit Suisse (NYSE:CS) adding 16 percent and UBS (NYSE:UBS) rising 38 percent. Investors should look for this trend to continue in 2013 with European banks a high-beta, high-correlation relationship with the broader market.
Among the consumer discretionary stocks that have done particularly well over the last year are ATV-makers Polaris Industries (NYSE:PII) and Arctic Cat (NASDAQ:ACAT) which each rose better than 50 percent. Alcoholic beverage producer, marketer, and importer Constellation Brands (NYSE:STZ) has seen its stock rise over 71 percent during the last 52-weeks.
Traders may also get some ideas about potential companies to watch in 2013 by reviewing the best and worst overall performers in 2012. Among the big notable winners were US Airways (NYSE:LCC) with a gain of almost 160 percent, Sprint (NYSE:S), which was up 137 percent and Cheniere Energy (NYSE:LNG), which surged 111 percent.
Well-known online auction site eBay (NASDAQ:EBAY) also had an incredible year as the large-cap name added 65 percent. Other large-cap winners included Apple (NASDAQ:AAPL) and Oracle (NASDAQ:ORCL) with both stocks rising around 30 percent.
The worst performers on the year included Dow component (NYSE:HPQ) which plunged 45 percent, Cliffs Natural Resources (NYSE:CLF) and Dell (NASDAQ:DELL). The latter two stocks lost 40 percent and 32 percent, respectively. It is not uncommon for the biggest losing stocks to be among the biggest winners the following year, so these are a few names that could be of interest to traders. A good example of this phenomenon was the performance of the Bank of America in 2012.
The New Year has started off with a bang, with the S&P 500 already rising almost 3 percent in 2013 over the course of the first three trading days. Based on this start, it certainly seems that the stock market could be in line for another strong year which should yield plenty of solid opportunities for active traders.
Lightspeed Financial Services Group LLC is not affiliated with these third-party market commentators/educators or service providers. Data, information, and material (“content”) are provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities or contracts. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lightspeed Financial Services Group LLC does not endorse, offer nor recommend any of the services or commentary provided by any of the market commentators/educators or service providers and any information used to execute any trading strategies are solely based on the independent analysis of the user.
Copyright © 2001-2021, Lightspeed, LLC. All Rights Reserved.