Markets

Coca-Cola Closed at a 52-Week High, and Energy, Utilities and Staples Rose While Tech Sank 3%

Coca-Cola gained 2.07% to $93.90 on October 16, its highest close in a year, and 6.64% for the week. The energy ETF rose 2.52% to a 52-week high, utilities 1.34% and consumer staples 1.08%, while the technology sector fell 3.02% and the Dow ended the week 0.67% higher.

Somebody was buying on Friday; it just was not anything with a chip in it. Coca-Cola rose 2.07% to $93.90, closing at the high of the day and at its highest level in at least a year, eleven days before it reports third-quarter results. For the week the stock gained 6.64%. The Consumer Staples Select Sector SPDR (XLP) rose 1.08% on the day and 5.02% on the week; the utilities ETF (XLU) added 1.34% and the healthcare ETF (XLV) is up 3.45% on the week. Energy (XLE) gained 2.52% to a 52-week high of $68.24.

That is how the Dow Jones Industrial Average finished a week in which the Nasdaq lost 4.48% with a gain of 0.67%. Chevron rose 2.59% on Friday, Coca-Cola 2.07%, JPMorgan 1.25% and Visa 0.72%, enough to offset the index's technology members. The S&P 500's technology sector fell 3.02% on Friday and 7.70% on the week.

The rotation was visible inside the largest stocks too. Apple, up 0.43% on Friday and 2.03% on the week, was the only mega-cap technology name to rise; Visa and Mastercard gained 4.45% and 4.80% on the week, McDonald's 3.29% and Pfizer 4.60%. These are companies whose earnings do not depend on how much anyone spends on data centres, and whose balance sheets borrow little, which this week turned out to be the only thing the market wanted to own.

Falling yields helped. The 10-year Treasury yield ended the week at 5.10%, down from 5.24%, and the long-bond ETF TLT gained 2.65% in five sessions. Dividend payers compete with bond yields for the same investors, and a yield that stops rising removes the main argument against paying up for a stock like Coca-Cola on 2% a year.

The caution is the calendar. Coca-Cola reports on October 27 and Visa the same day, both from 52-week highs, in a season in which Travelers beat by two dollars a share and fell, and in which the beat-and-drop has been the rule at the top of the range. A defensive stock bought because it was not technology still has to deliver a quarter.