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Sector Rotation in March: Financials Lead Now

Tuesday, 13 Mar 2012 | 6:23 PM ET
A tour bus passes the Wall Street bull in the financial district January 22, 2007 in New York City.
Getty Images
A tour bus passes the Wall Street bull in the financial district January 22, 2007 in New York City.

Financial stocks led the rally Tuesday , after JPMorgan instated a 20 percent dividend increase to 30 cents a share, along with a $15 billion stock buyback plan.

After the close, the Fed announced that 4 of 19 bank-holding companies failed stress tests in one or more capital ratios.

In the past three months, however, the tide in financials has turned. The sector, which posted an 18 percent loss in 2011, has been consistently up each month this year.

The chart below highlights the top three sectors (green) and worst three sectors (red).

Technology companies, for example, were among the best performing stocks in January and February, but have now fallen to fourth place month-to-date.

On the flip side, some of the defensive names, such as telecom and utilities, which lagged for most of the year, are charging ahead in March.

What’s the catalyst behind the sector rotation? Concerns of slowing global growth in China and Europe have provided a recent boost to defensive stocks, while having the reverse effect for more volatile assets, such as commodity stocks that fall within materials and energy.

Here is a look at the best performing financial stocks in the Financial Sector SPDR ETF , which saw its highest percent increase since December 20.



Source: CNBC Analytics and Capital IQ



Comments? Ideas? Send them to giovanny.moreano@nbcuni.com

  Price   Change %Change
S&P 500
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SPDR FIN SEL
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ETFC
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WFC
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C
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GS
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HCBK
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JPM MLP ETN
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CBG
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