Boring stocks are back in style as market wobbles
Older bellwethers like AT&T and Intel are flexing some muscle, filling the void left by investors fleeing momentum names.
Don't look now, but some old standbys are back in favor in the stock market.
Much has been made in the selloff of hot stocks like Netflix (NFLX), Facebook (FB) and what feels like the entire biotech space this year, but in the face of those declines older bellwethers like Intel (INTC), AT&T (T) and Cisco Systems (CSCO) have been flexing some muscle.
The Nasdaq Composite is down 6 percent since hitting its high-water mark on March 6, and some of last year's highest fliers have been among the names dragging it lower. Netflix, Facebook and Tesla Motors (TSLA) each hit their high for the year within a few days of the Nasdaq's peak, and have tumbled 15 percent or more since.
"Investors seem to have been reminded once again that prices frequently lead fundamentals," S&P Capital IQ's Sam Stovall wrote in an April 2 note.
While he used it to suggest that the spate of soft economic data largely blamed on winter weather should start showing signs of improvement, it also bears repeating in the context of momentum stocks with another earnings season upon us.
While the fast-rising names of 2013 have been swooning ahead of their first-quarter report cards, many of their elders have been picking up speed. Dow components Intel, AT&T and Cisco, hardly anyone’s idea of sexy stocks, are each up better than 5.5 percent over the last month.
Industrial machinery giant Caterpillar (CAT) -- left for dead by many as emerging markets showed weakness and worse in the first quarter of 2014 -- has made similar gains and even Alcoa (AA), which was booted from the Dow last year, posted better than anticipated results Tuesday and has been in positive territory for the last month.
Compared with the former high-fliers, which include the likes of Google (GOOG) (down 9 percent over the last month), the stronger names of late also offer up the benefit of paying a dividend, which provides at least a dose of insulation should the market's choppiness continue or worsen. Cisco and Intel each carry 3.3 percent yields, while AT&T's tips the scales at more than 5 percent.
The rotation from momentum names into some old stalwarts hasn’t dented the confidence of some when it comes to the former. Stifel Nicolaus made a case for buying stocks like Facebook, Netflix and a few others Tuesday, falling knives be damned.
Wednesday morning brought something of a rebound, with the major averages signaling a higher start and the Nasdaq still trying to make up ground from the back-to-back losses greater than 1 percent to book-end the weekend.
Facebook shares were up nearly 5 percent in Wednesday trading, while Netflix fell by less than 1 percent. Intel was flat and Cisco rose by less than 1 percent.
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