Last week was another fine one for U.S. stocks as the broader
market fought off an array of data points that can only be
considered mixed at best to again close higher. With last week's
1.4 percent pop, the S&P 500 is now up 0.8 percent this month
and has soared 2.8 percent since April. Still, there are causes
for concern as the often ominous month of May lurks around the
On Friday, the Commerce Department said U.S. GDP grew 2.5
percent in the first quarter, missing the consensus estimate of
3% growth. The Thomson Reuters/University of Michigan Survey of
consumer confidence fell 2.8 percent to 76.4 in April. That
reading is the same as April 2012. Economists expected a reading
Then again, the earnings flow looks decent. Profit at S&P
500 companies gained 1.1 percent in the first three months of the
year, according to analysts' projections
compiled by Bloomberg
. In the prior week, the projection called for a 1.1 percent
Indeed, the week ahead has plenty to offer on the earnings
front, but global central banks (who else?) will likely decide
how markets perform this week. Here are a few of the
to trade this week.
ProShares UltraShort Euro (NYSE:
) The inclusion of the ProShares UltraShort Euro on this week's
list is by no means a surprise and not just because the European
Central Bank meets on May 2. Over the weekend, Iceland's
center-right opposition party came out on top in the country's
parliamentary elections, ousting rivals that pushed for European
In other words, Icelanders just voted against the euro. Then
there is the anti-euro party that is gaining strength in Germany,
which is becoming a thorn in the side of Chancellor Angela
Merkel. In advance of the ECB meeting Thursday, Eurozone
unemployment data is due out Tuesday. Already at a record high of
12 percent, economists see no signs of early relief.
Despite all the negative factors, the euro has remained
persistently strong, making it difficult for the region's export
economies to mount a legitimate recovery. The ECB should lower
interest rates. Whether or not that happens is a different
Health Care Select Sector SPDR (NYSE:
) Of the 271 S&P 500 companies that have already delivered
quarterly results, less than 44 percent have topped analysts'
revenue forecasts, well below the 62 percent average since 2002
and the 52 percent rate for the last four quarters,
according to Thomson Reuters
That is relevant to XLV because Pfizer (NYSE:
) and Merck (NYSE:
) both step into the earnings confessional this week. The Dow
components combine for nearly 20 percent of the weight in what
has been one 2013's top-performing sector funds.
Also of relevance to XLV investors is news that Gilead
) and Bristol-Myers (NYSE:
) should be in play on reports that a combination of Gilead's
sofosbuvir with Bristol's daclatasvir, hepatitis C drug cocktail,
cured all 41 patients in a trial,
The thing is Gilead wants to go it alone when it comes to
hepatitis C treatments. Both stocks are top-10 XLV holdings.
PowerShares Dynamic Food & Beverage Portfolio (NYSE:
) The PowerShares Dynamic Food & Beverage Portfolios once
toiled in obscurity, but now the ETF has $235 million in assets
under management. PBJ has flourished this year for at least two
reasons: Investors' thirst for defensive sectors and the theory
that the ETF is home to Warren Buffett's next food industry
Do not forget that PBJ is also chock full of
high return on equity stocks
. PBJ is up nearly eight percent since it was highlighted as an
ideal way to get exposure to multiple Buffett targets. The good
news is this ETF does not need takeovers to march higher.
Investors have already shown a proclivity for defense names and
that theme will continue to boost PBJ.
For more on ETFs, click
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