The U.S stock market is off to a fast start in 2012 with the Dow Jones Industrial Average hitting a 5-year high above 14,000. In 2013, the Dow has already risen almost 7 percent. The S&P 500 is also closing in on new 5-year highs and has risen better than 6 percent on the year already. The Nasdaq Composite is trading at its best levels since the tech bubble and has notched gains of better than 5 percent in 2013.
The stock market has benefited from the resolution of the debt ceiling and an atmosphere of confidence about the forward-looking outlook for the economy. Volatility has remained very low and investors have been putting cash to work in risk assets. After years of easy money policies from the Fed and other global central banks, a taming of the European sovereign debt crisis, and moderate to positive domestic economic trends, the world is awash in liquidity. More and more of this liquidity is finding its way into stocks and other risk assets.
The market has been led by consumer staples, transportation and financial stocks. The consumer staple sector is already up more than 7 percent on the year, among the leading market sectors. Transportation has been the top sector, notching a gain of over 8.60 percent on the year. Financial stocks have risen around 7 percent.
Among the best performing stocks have been Netflix (NASDAQ:NFLX), Marvell Technology, Best Buy (NYSE:BBY), Sony Corp. (NYSE:SNE), and Valero Energy (NYSE:VLO). Netflix has risen almost 78 percent after a very bullish fiscal fourth-quarter earnings report.
Marvell (NASDAQ:MRVL) which has been beaten down in recent years is up almost 31 percent in 2013. Well-respected hedge fund manager David Einhorn’s Greenlight Capital continues to be a large holder of the chip-maker.
Best Buy (NYSE:BBY) has risen as the company’s founder Richard Schulze has been in talks to takeover the struggling electronics maker. The stock is up almost 36 percent and Schulze may make a bid for the company in February.
Sony shares have risen around 35 percent on the year and Valero, an energy refiner, has climbed more than 31 percent. January was an excellent month for the market and 2013 could be setting up to be a very big year for risk assets.
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