Saturday, December 15, 2007

Stock Sector Performance: A Mixed Bag Turns Negative

Here are some of the major stock sectors within the S&P 500 universe and their performance during two time periods: 2007 to date and (since the October market top). All values are expressed as percentage changes:

S&P 500 Index, SPY: 3.92 (-5.95)
Materials, XLB: 20.54 (-3.54)
Industrials, XLI: 12.71 (-5.82)
Consumer Discretionary, XLY: -13.32 (-12.41)
Consumer Staples, XLP: 11.10 (3.72)
Energy, XLE: 30.39 (.79)
Health Care, XLV: 6.60 (-1.65)
Financial, XLF: -20.11 (-17.79)
Technology, XLK: 15.05 (-3.22)

What we find is quite a mixed bag: soaring performance over the course of the year from energy and materials and horrendous performance from financial and consumer discretionary shares. Since the October market top, it's been more of the same: very weak financials and consumer discretionaries and relatively strong consumer staples and energy.

Sectors that benefit from the weak dollar and that are perceived as recession resistant have been among the winners. Sectors affected by housing and credit crises have been among the big losers.

This past week here's how our sectors have shaped up:

S&P 500 Index, SPY: -2.48
Materials, XLB: -2.46
Industrials, XLI: -2.08
Consumer Discretionary, XLY: -4.73
Consumer Staples, XLP: -1.49
Energy, XLE: .35
Health Care, XLV: -2.86
Financial, XLF: -5.93
Technology, XLK: -.52

Financials and consumer discretionary shares continue to lead the downside, suggesting that the Fed's actions and those of the Treasury have not been sufficient to ease those housing and credit concerns. For the most part, however, the other sectors turned tail and went south as well. I found the end of week performance particularly interesting in that the weak Yen was no longer correlated with either falling bond yields or rising stock prices. The carry trade wasn't carrying the stock market higher, and that--along with expanding sector weakness--caught my attention.


Carry Trade Carries Stocks

A Recent Look at the Sectors