The second quarter edition of Standard & Poor’s Quality Trends sourcebook found that equities ranked as “high-quality” stocks by S&P returned a -1.13% for the second quarter of 2006, compared to “low-quality” stocks that posted a -9.13% return for the quarter. That represents a sharp turnaround from the first quarter, when low quality-ranked stocks posted a 19.30% return compared to 2.73% for high-quality stocks.

For the half year, S&P reported that low-quality ranked stocks returned 8.41% versus 1.58% high quality stocks.

In a statement, Massimo Santicchia, director of S&P’s Portfolio Advisor model portfolio platform and author of Quality Trends, said the turnaround “could portend a market rotation and set the stage for an extended period of high quality outperformance.”