The news comes days after the Federal Reserve stamped its approval on another month of bond buying, with the added bonus of Ben Bernanke stating that the Fed is “prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation.”
If that’s not enough to validate a continuing bull market, consider the European Central Bank’s exceptional move this week. Mario Draghi cut key interest rates to 0.5%, the first time in 10 months, following weaker manufacturing data out of the top four largest economies in the Eurozone. Germany, France, Italy and Spain all experienced manufacturing contractions.
Our portfolio manager of the Emerging Europe Fund, Tim Steinle, described the ECB’s motivation this way: It’s one thing to punish the periphery; it’s another to weaken the core.
The S&P 500 has climbed an amazing 12.74% through April 30, so if you’re eager to do some investment spring cleaning, you might want to consider areas that have underperformed. For example, take a look at the year-to-date returns by sector, which reveal an interesting pattern. Health care, utilities, consumer staples and consumer discretionary have all climbed more than 15%, much more than the market. Meanwhile, companies in the materials, energy and industrials sectors have lagged the overall index.