These Sector ETFs Are Leading In The First Quarter
The price action of the S&P 500 has been different in every month this year. Let’s take a look at what’s going on and how Sector ETFs are performing in the first quarter.
Large cap US stocks started out the year in a consolidation phase that lasted through the month of January.
Then the price action turned bullish in February. The S&P 500 surged to a new all-time high.
And now that the calendar has flipped to March, the S&P 500 is moving lower… with Friday’s 1% selloff putting an exclamation point on the weakness.
The selloff over the last week has wiped out nearly all of the S&P 500’s gains for the year. The large cap index is now up less than 1% year-to-date.
But there are certainly winners and losers among the individual sectors.
Sector ETFs Leading In The First Quarter
So far this year, there are four sectors in the S&P 500 that are outperforming the S&P 500.
It should come as no surprise that consumer cyclicals, basic materials, health care, and technology are the sectors that are doing the best in the first quarter.
These sectors are benefiting from low oil prices. Consumers have more money to spend on everything else when they don’t have to spend so much money at the gas pump.
What’s more, lower fuel costs do wonders for the consumer sentiment. So, even though the real impact on consumers wallets aren’t huge, it has a big impact on consumer psychology.
Sector ETFs Lagging In The First Quarter
There are also four sectors that are lagging behind the S&P 500.
No one should be shocked to see the energy sector among the weakest performing sectors. The drop in oil prices and the glut of oil in the market are having a big impact on the entire energy sector.
However, it’s important to note that solar stocks are one area of the energy sector that has bucked the trend. There are some really exciting things going on in the alternative energy space right now.
But energy isn’t the worst performing sector so far this year. That dubious title belongs to the utilities.
Utilities are the stocks that are most often associated with bonds. They are stable businesses that pay regular dividends.
Many income investors own utilities stocks for their dividend. As a result, utilities performance often mirrors that of bonds.
Over the last month, bonds have been sold off as investors have flocked back into riskier investments. This rotation of money has hit utilities stocks as well. So far this year, the utilities sector is down 8.7%!
How Will Sector ETFs Finish In The First Quarter?
The price action of the market has been changing month to month. It’s gone from consolidation, to an uptrend, and starting off the month of March with a pullback.
If this price action pattern holds, we could be in for a rough month.
Good Investing,
Corey Williams
Note: Corey Williams writes and edits ETFTradingResearch.com. Sign up for our free ETF reports and free e-letter at http://etftradingresearch.com/free-sign-up. We’re devoted to helping you make more money from ETFs.
Category: Market Analysis
