If you want to see an example of where the term winners and losers couldn’t be more applicable, take a look at the performance of S&P 500 sector ETFs on a YTD basis. The chart below is derived using performance numbers from our Daily Sector Snapshot report, which provides investors with an easy-to-read matrix of technical analysis, breadth and internal readings, and fundamental data points. It’s the perfect way to get an aerial snapshot of both current readings and the way they’ve been trending for each of the major sectors. This perspective also allows investors to see how sectors stack up versus each other as well as relative to themselves on a historical basis.
2020 has clearly been a case of the have and have nots. On the haves side, Technology (XLK) and Consumer Discretionary (XLY), which is basically Amazon (AMZN) and a few other retailers, top the list. Rounding out the top three, Communication Services (XLC) is the only other sector up over 10% and outperforming the S&P 500. On the have-nots (or in this case, the ‘nearly halves’) side, we have Energy leading the way lower with a decline of 41%, followed by Financials (XLF) which is down 21.2%.
There was a time not long ago when Energy and Financials were considered the life-blood of a capital intensive economy, but these two sectors have been deemed irrelevant by the market in the current work-from-home world where interest rates are zero and money is practically free. Instead, Communications, Technology, and Retailers with a strong online infrastructure are the ever-important cogs in the digital economy. Today, it may seem that this is a secular shift in the shape of our economy, which in many respects is true. But don’t count out the old leaders just yet. Someday, ‘going to work’ will once again mean more than just rolling out of bed and over to your desk chair. In that environment, people and goods will increasingly move, capital intensive infrastructure projects will be undertaken and interest rates just might move higher. Click here to view Bespoke’s premium membership options, including the must-have Daily Sector Snapshot report.