S&P 500 Telecom Index Hits Four-Year High

By Gary Kim June 22, 2012

Economic uncertainty and turmoil tends to drive investors to safer havens, and telecommunications equities recently have been beneficiaries of those trends.

Telecommunication shares have posted the sharpest advance among the Standard & Poor’s 500-stock index’s 10 sectors in the past three months, followed by utilities. Of course, you also know what that means. There will be sector rotation.


Telecom and utilities stocks’ reputations as safe havens have made the sectors attractive as investors have sought to avoid investment damage caused by Europe’s debt crisis.

The S&P 500′s telecom sector is at a four-year high, as a result.

Such companies’ profits and margins typically hold up when economic growth slows. Their share prices are fairly stable, and they tend to get a large portion of their revenue from the U.S. market, which to many seems safer than Europe or some other markets, at the moment.

But sentiments changes, especially when a sector begins to approach an “overbought” condition, which some might say telecom equities are approaching.

As always seems to be the case, too much favorable sentiment is a contrarian indicator. If “everybody” likes the sector, most people who want to buy, already have. 





Edited by Brooke Neuman

Contributing Editor

SHARE THIS ARTICLE
Related Articles

Facebook Closes 50 Million Dollar Deal for Live Streaming

By: Andrew Bindelglass    6/24/2016

Facebook seems like it is ready to launch a fledgling version of Facebook Live in the near future, Osofsky said. "We have an early beta programm for a…

Read More

Twilio IPO: Bellwether or Blip for the API Business?

By: Doug Mohney    6/23/2016

San Francisco-based Twilio counts Uber, Open Table, and Nordstrom among its customers. In 2015, the company's revenues were around $167 million with a…

Read More

Brexit: The Whole World is Watching! Including Tech

By: Peter Bernstein    6/20/2016

It is hard to imagine a vote on something- even for those of us in the U.S. consumed and amazed by the daily barrage of presidential election year pol…

Read More

How Steve Jobs Would Fix Apple

By: Rob Enderle    6/20/2016

It is hard to see Apple in trouble. It has massive reserves and remains one of the most powerful brands in the market, yet every week seems to contain…

Read More

Twitter Invests $70M in SoundCloud

By: Andrew Bindelglass    6/16/2016

It seems that SoundCloud sees much of the benefit in this partnership with Twitter in the rollout of their new subscription service that is meant to s…

Read More