In the first quarter, investors found little place to hide. None of the major sectors were positive to open 2008, including last year's big performers, ranging from energy and telecom to utilities.

But openings started showing as April approached. By the start of the second quarter, strategists and analysts say that key parts of the U.S. market started showing openings, boding a better investing climate for the rest of 2008.

Even in the first quarter, despite a broad sell-off, some parts of the market did noticeably better than others. Consumer staples held up the best in the S&P 500, falling 2.78% as shaky economic fortunes didn't stop purchases of food and prescription drugs, among others.

Materials was the second-best performer with average losses of 3.55% in the quarter. That was followed by industrials' 4.47% drop and consumer discretionary's 6.25% fall. Energy came in at the middle of the pack with all of the remaining five sectors posting double-digit setbacks.

But it was a tale of two vastly different cycles. After hitting a 52-week low under $33 a share in late January, Industrial Select Sector SPDR (AMEX: XLI) rebounded past $38 before settling some to end the quarter.

Energy stocks staged an even more dramatic tug-and-pull quarter. Take iShares Dow Jones U.S. Oil & Gas (NYSE: IEO). It fell to a low in the mid-$50-per-share range in late January. But for most of the following 14 weeks, it moved up strongly to finish at around $75 per share.

"With a market low on the S&P 500 taking place on March 10, it pretty much dragged down most of the groups early in the year," said Sam Stovall, S&P's chief investment strategist for equity research. "The economic conditions still didn't improve much later and the markets remained highly volatile throughout the quarter."

In the past 12 months through March 31, the S&P 500 posted 16 one-day drops of 2% or more - four times its long-term average.

Opportunity Knocking?

By early March, the S&P 500 had fallen 18.64% from its early October 2007 peak. Since that low point on March 10, 2008, the benchmark rose 3.3% through quarter's end. "The fundamentals of the market remained about the same in the second-half of the quarter," Stovall said. "But sentiment became more opportunistic as some investors started believing we'd gotten close to a bottom."

A mirror of such change in investment mood could be seen in the Claymore/Zacks Sector Rotation ETF (AMEX: XRO). Using a top-down approach through quantitative modeling of 16 different sectors in the U.S., the fund took a distinctly defensive stance most of the quarter.

XRO moved completely out of financials, oil and energy. It increased its holdings in medical slightly and increased its overweight in computers and technology to about a quarter of the portfolio.

Other smaller shifts included taking positions in consumer discretionary names. "The index wasn't in that area of the market at all before the first quarter," he said. "But it shifted into some of the sector's larger names such as Wal-Mart and CVS," said Christopher Huemmer, vice president of index strategies at Zacks Investment Research, which created the ETF's underlying benchmark.

The theme for the second half of 2007 and first quarter of 2008 was essentially that of a "global margin call," noted Stephen Wood, a senior portfolio strategist at Russell Investments.

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