Leaders-Laggards

The return to risk assets pushed tech stocks back into leadership. The rally in utilities stocks that has been in place for several weeks took an abrupt turn. The solid run for the staples sector took a brief pause last week.

Utilities have been outperforming the S&P 500 for a solid month now and are bringing other defensive assets, including consumer staples and Treasuries, along for the ride. While longer-term yields are bouncing around a bit and performance relative to stocks is choppy, the trend over the past two months has been towards lower interest rates. A relatively firm statement from the Fed detailing rate policy plans added another layer of strength to the greenback.

This is again becoming one of those incredibly narrow market rallies that is being led by tech and almost nothing else. Utilities has actually been one of the better performing market sectors over the past month. While large-caps keep blasting ahead, small-caps aren’t buying it.