Goldman Sachs Portfolio Strategy Research published their U.S. Quarterly Chartbook on Wednesday, July 2nd. The Quarterly Chartbook provides in-depth macroeconomic, sector- and stock-related data for investors. GS analysts David J. Kostin and colleagues point out that equities outperformed bonds in the first half of 2014, and that both mutual funds and hedge funds underperformed relative to the S&P 500 (INDEXSP:.INX), hedge funds considerably so.

The market today Equities

First half overview

Kostin et al. highlight that the S&P 500 was up by a robust 7% during first half of the year. The equities market index was led higher by the Utilities (19%), Energy (13%) and Health Care (11%) sectors. Information Technology was another strong-performing sector in 1H. Hedge Funds was one of the worst-performing sectors during the period, up less than 2%.

The report also notes that Health Care is currently the most expensive sector. More than 375 equities among the S&P 500 posted positive returns led by Newfield Exploration, which was up 80%, while Coach fell the most with a 38% decline. For the large cap Top 100 in the S&P 500, Bank of America Corp (NYSE:BAC) and General Motors Company (NYSE:GM) enjoy the highest 2015 EPS growth.

Equities  earnings growth

 

2014 leaders

The top performing S&P 500 stocks so far in 2014 are Newfield Exploration Co. (NYSE:NFX), Nabors Industries Ltd. (NYSE:NBR), Keurig Green Mountain Inc (NASDAQ:GMCR), Forest Laboratories, Inc. (NYSE:FRX) and Electronic Arts Inc. (NASDAQ:EA).

2014 laggards

The top performing S&P 500 equities so far in 2014 are Coach Inc (NYSE:COH), Whole Foods Market, Inc. (NASDAQ:WFM), Staples, Inc. (NASDAQ:SPLS), Bed Bath & Beyond Inc. (NASDAQ:BBBY) and Tractor Supply Company (NASDAQ:TSCO).

Goldman Sachs equities recommendation

For the second half of 2014, Kostin and colleagues have placed an Overweight rating on the Consumer Discretionary, Industrials and Information Technology sectors. The GS analysts remain Neutral on the Energy, Financials, Health Care and Materials sectors, and Underweight on Consumer Staples, Utilities and Telecom Services.

The Goldman Sachs analysts also offer four Thematic Trade Recommendations optimized for current market conditions:

  1. BUY Buyback Basket (GSTHREPO); SELL S&P 500
  2. BUY Growth (Russell 1000 G); SELL Value (Russell 1000 V)
  3. BUY High Operating Leverage (GSTHOPHI); SELL Low Operating Leverage (GSTHOPLO)
  4. BUY Interest Rate Sensitive (GSTHUSTY); SELL S&P 500