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Stocks moved higher again in February, with the S&P/TSX Composite in Canada and the S&P500 index in the U.S. each gaining about 1.3%. But the joy wasn’t necessarily that widespread. There was a high level of volatility and the gains were confined to a smaller group of large stocks, including the financials and the consumer stocks. The RBC ‘style indices’ reflected this difference in both the U.S. and Canada as the Predictability index rose 2.7% while the Momentum, Value and Growth Indices all rose much less. The difference was also apparent in Canada in the size indices, where the large stock S&P/TSX60 index gained 1.7% while the smaller stock S&P/TSX Completion index gained only 0.1% and the S&P/TSX Small Cap index fell by 3.0%. Investors seem to be saying that they want to buy stocks but that they don’t want to increase risk too much so they are sticking to the biggest and safest names with the best earnings predictability.
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