The S&P 500 Index and the Dow Jones industrial average delivered their best first-quarter performances in seven and four years, respectively, with many Colorado-based stocks and mutual funds posting strong gains during the quarter that ended Friday.
But with interest rates expected to inch higher, consumer spending starting to slow and oil prices again approaching $70 a barrel, can the rally continue?
“We are preparing for a nasty downturn,” said Jeffrey Hirsch, editor of the Stock Trader’s Almanac of Nyack, N.Y. “The market is about to run out of steam. We are advocating safe-haven investments.”
Hirsch, who remains bullish on alternative energy stocks and select technology companies, said the stock market historically runs higher from November through April. The summer months are typically choppy to down, he said.
In addition, years such as this with national midterm elections generally produce uncertainty: Nine of the last 14 bear markets began during mid-term elections, he said.
Hirsch said he advocates paring back stock positions, keeping cash on hand and re-entering the market after it bottoms out in late August or September.
John Claxton, a vice president with RBC Dain Rauscher Inc. in Denver, was more bullish.
“We think the market will ebb to the upside,” said Claxton, whose favorite sectors include consumer-goods staples, energy and technology.
Nonetheless, he said the market during the next few months “could still be mixed.”
During the quarter that ended Friday, 81 of the state’s 114 publicly traded companies were up. Colorado’s top-performing sectors included biotechnology, real estate investment trusts, telecommunications and natural resources.
The Colorado Bloomberg Index, a basket of the state’s public companies, gained 9.6 percent.
Nationwide, the broad S&P 500 finished the quarter up 3.7 percent, the blue-chip Dow gained 3.7 percent and the technology-rich Nasdaq was up 6.1 percent.
Mining company Apollo Gold Co. delivered the best return among Colorado public companies for the quarter – a 212.5 percent gain. Greenwood Village- based HyperSpace Communications, a software maker, was the state’s worst performer, declining by 39 percent.
One of the state’s newest public companies, Chipotle Mexican Grill, closed Friday at $55.39, a 151.8 percent gain from its IPO price in January.
Of Colorado’s largest general- equity funds – those with more than $25 million in assets or 1,000 clients – 17 posted double-digit gains through Friday. The remaining 73 reported single-digit returns, with zero ending the quarter in the red.
The top performer, Janus Overseas, posted a 19.9 percent gain for the quarter. That comes on the heels of last year’s 32.4 percent increase for the fund.
The still-hot international market, fueled mostly by robust economic growth in India, Latin America and the Pacific Rim, produced a 9.6 percent average return, according to the Morgan Stanley foreign stock index.
The state’s three top-performing specialty mutual funds all belonged to Denver-based Icon Funds: Materials (up 16.6 percent), Industrials (up 16.6 percent) and Energy (up 11.7 percent). Colorado’s bond funds were mixed, with six posting gains and six declining. Westcore Flexible Income was the top performer, with a 3.2 percent gain.
Staff writer Will Shanley can be reached at 303-820-1260 or wshanley@denverpost.com.
