Comparing the Spring and Summer Rallies

Yesterday’s 2% gains capped an impressive 9-day run for the markets that has brought the Dow back above the 9,000 mark for the first time since early January. All three major indices (Dow, S&P, and Nasdaq) now have rallied to their highest levels since the Fall, with the Dow and S&P rising 11% and the Nasdaq gaining 12% during that 9-day period.

While the previous spring rally came on severely oversold conditions, the current summer rally has come on the heels of a number of earnings surprises and on optimism that the economy is beginning to stabilize with the pace of declines moderating.

Another noticeable difference: the current rally has been quite broad-based. Recall that the strong rebound in the markets from the March lows to the June highs was largely led by the financials at first, and then later (to an extent) by commodity stocks, as the reflation trade resurfaced. During this 3-month spring rally, financials, which nearly doubled in value, way outperformed any of the 9 other S&P 500 sectors, which rose anywhere between 15 and 55 percent.

The leadership during this month’s rally has been notably broader, with more even, double-digit gains being spread across 6 of the 10 S&P 500. Take a look at the S&P 500 sector performance during the 9-day rally prior to today’s trading:

Since July 10

  • Materials +17.6%
  • Technology +13.9%
  • Consumer Discretionary +13.5%
  • Energy +12.9%
  • Industrials +12.5%
  • Financials +12.5%
  • Telecom +8.5%
  • Utilities +8.0%
  • Healthcare +6.9%
  • Consumer Staples +5.5%

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