While yesterday’s decline has been largely blamed on the ongoing trade dispute between the US and China, we wouldn’t discount the impact of end of quarter rebalancing either. The chart and table below help to illustrate the point. The chart compares the performance of the 24 S&P 500 Industry Groups on Monday (x-axis) to their QTD performance through last Friday (y-axis). While there are some exceptions, the industry groups that were performing the best QTD through last Friday were down the most on Monday, while the QTD laggards performed best on Monday.
You can further see the “changing places” performance in the lower table. As shown, some of the best-performing industry groups QTD through Monday (Retailing, Software, and Energy) were down well over 2% yesterday. Conversely, many industry groups that were lagging QTD heading into Monday (Food, Beverage & Tobacco and Household & Personal Products) actually saw marginal gains on the day. Trade is definitely a factor at play in the market these days, but it’s hardly the only one.