Looking Back, Looking Forward – Sunday, Feb. 7

Energy (XLE), communication services (XLC), and financials (XLF) led the S&P 500.

Health care (XLV), utilities (XLU), and consumer staples (XLP) lagged the benchmark.

Market breadth was strong. The number of advancing stocks in the S&P 500 beat the number of decliners by a 15-to-2 ratio.

Consumer discretionary companies accounted for eight of the S&P 500’s top 10 winners. Health care and materials companies were among the other top 10 winners. Retailers and resorts & casinos in the consumer discretionary sector were well represented.

1A. Consumer Discretionary – Retailers

Shares of L Brands (LB) surged 21% to claim the top spot among the S&P 500’s winners for the week. The retailer raised its mid-point of its fiscal fourth-quarter EPS guidance by 8%. The operator of Bath & Body Works and Victoria’s Secret stores firmed its plan to split-off its Victoria’s Secret line by August.

Tapestry (TPR) shares jumped 19% after the owner of Coach and Kate Spade brands topped analysts’ quarterly sales and EPS forecasts. Tapestry’s e-commerce sales grew triple-digits year-over-year to account for one-third of global sales.

1B. Consumer Discretionary – Resorts & Casinos

As vaccines rolled out, investors gravitated towards resort & casino stocks on optimism over profits and margins surging later this year. Penn National Gaming’s (PENN) strong start of its online gambling operations added to the bullishness. Worse-than-expected quarterly results from Wynn Resorts (WYNN) did not detract. MGM Resorts (MGM), Wynn Resorts, and Las Vegas Sands (LVS) were up 20%, 18%, and 16%, respectively.

2. Health care

Align Technology (ALGN) shares soared 18% after the maker of Invisalign teeth straighteners beat analysts’ fourth-quarter sales and EPS forecasts. Sales surged 28% year-over-year as adults joined teens in getting their teeth straightened.

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