Figure 6
S&P 500 Sector Returns YTD-October
Figure 7
Top performing stocks on S&P500-Netflix & BestBuy
31.91%33.59%
28.04%
25.12%
20.68%
16.99%18.11%
16.11%
Consumer Discretionary
Healthcare
Industrials
Financials
Consumer Staples
Energy
Information Technology
Materials
Utilities
Telecommunications
9.74% 10.76%
Source: Bloomberg, First Citizens Research and Analytics
Retailers, auto-makers, restaurants and travel companies are
trading at their highest valuations in approximately 4 years,
but Netflix and BestBuy, the two largest gainers for the year
on the S&P 500, are driving the consumer discretionary
sector’s advance, with both stocks increasing over 200% YTD.
Following a 50% slump in 2012 with a forecasted demise,
BestBuy dramatically turned around in 2013 soaring 261%
for the year to USD42.80, as the company has been able to
execute ahead of schedule on cost-cutting initiatives, sign
store-space partnerships with Microsoft, Google and Samsung,
and introduce kiosks for Google and Amazon products. It has
also transformed its e-commerce platform to tackle growing
competition from digital retailers, including launching price
matching and same-day pick promotions, revamping its
website and rewards program to boost online sales.
Netflix shares rose 248% this year to USD322.48 driven by
growth in its global subscribers and tripling profits. Much
of the subscriber growth is from the new countries where
Netflix launched, with streaming service now available in
more than 40 countries servicing 9.2 million international
subscribers. Netflix has been aided by a new generation of
viewers who have grown up with a preference for watching
movies and series online over traditional television. Along
with the growth of smart TVs and internet TV devices, such
as AppleTV and Roku that increased the availability of TV
streaming platforms, tablets and smart-phones are growing
rapidly as Netflix viewing platforms.
Healthcare stocks have historically been the bane of public
market investors until this year, where they are now leading
the gains of U.S equities, as companies cut costs and
investors speculate that expansion of insurance programs
will benefit hospitals and insurers. Drug-makers, health
insurers and biotechnology companies in the S&P 500 Index
Source: Bloomberg, First Citizens Research and Analytics
have returned 32% year to date, October 2013, and 33.9%,
including reinvested dividends. Strong tailwinds in the sector
have been translated into performance this year, with the
shifting regulatory environment including FDA approval of
39 drugs in 2012, the most in almost a decade. Furthermore,
estimates show that Obamacare, which is set to begin its final
phase of implementation in 2014, may extend insurance over
the next decade to approximately 27 million people who are
currently uninsured. Insurance companies and other parts of
the healthcare supply chain are expected to benefit from the
increased demand.
Twitter IPO Benefits from U.S. IPO Gains
Initial public offerings (IPO) in the United States have taken
off this year, with October 2013 having the most IPOs since
2007. With 195 deals completed in the first nine months of
the year, raising total proceeds of USD46. 䁉