The state of play for the first half of 2014? Everything rallies!
Admittedly, it's a bit of a surprise. Look at how much major asset classes have risen since the year got underway:
Asset Percent gain
S&P 500 6 percent
MSCI World 4 percent
Total bond ETF 2 percent
Investors fretted over global instability and inflation, so gold rallied. Others worried about slower growth, so Treasuries were boosted, which drove yields lower. However, the U.S. economy is slowly improving, so S&P 500 is up. Lower rates help emerging markets, so that sector has rallied.
For stocks, here's one important point: almost all the 2014 gains in the broad market have occurred within the last 5 weeks. Why is that? Well, we did have a brief unwind of biotech/new technology names in March and April that put a modest scare into the market. The 2014 rotation story saw money yanked briefly out of biotech to other sectors: high yields stocks jumped while energy and financials rallied.
You have to admit this year is not exactly shaping up like the playbook in December. Among 2014's biggest surprises:
1) still at 2.50 percent. Almost no one thought it would be here as we start July. There is demand for a safe haven, and a belief among many that the U.S. economy would not show the growth anticipated, has so far proved to be right.
2) Utilities is the leading sector in the S&P 500, up 16.5 percent year-to-date. Utilities are such a small sector as to be almost irrelevant in the S&P 500, but volumes were huge as investors flocked to yield names when rates stayed contained.
3) Second quarter volume, volatility fell off. It's not the summer doldrums because volume and volatility dropped off in May.
S&P sector, and percentage gain (or loss)
Utiltiites 16 percent
Energy 11 percent
Healthcare 10 percent
Tech 7 percent
Consumer Discretionary (1 percent)
One final point: buybacks have been a major factor in the 2014 stock move. Factset reports that quarterly Q1 buybacks grew 50 percent year-over-year: $154.5 billion in Q1 alone.
As part of CNBC's 25th Anniversary, we are devoting time today to where the markets will be 25 years from now. Check out my predictions on 7 huge changes coming from stock trading. Digital avatars! Different share types for the same company, new ways for companies to come to market, and how true 24-hour trading will be commonplace.
--By CNBC;s Bob Pisani