Thursday, 22 December 2011

S&P 500 YTD Performance By Sector

With only a few days left in the year, the pressure is on for the S&P 500 to end the year positive.  With the strong performance this week, the market is now only off 0.29% for the year.  However, that doesn't tell the full story as the individual sectors have a dramatically different performance.

The chart below breaks down the S&P 500 by its individual sectors.  Not surprisingly, the best performers this year has been the defensive plays, primarily Utilities, Consumer Staples, and Healthcare.  Utilities in particular had an extremely strong year at 13.69% gain.  Correspondingly, their P/E ratio has risen significantly to 14, a bit stronger than the P/E for the S&P 500 which is notable in and of itself.  Utilities as a value play will be a significant risk next year.

In contrast, Commodities and Financials are unsurprisingly the worst performers with the Financials returning an astounding -17.94%.  Many of these stocks are now resting with P/E's comfortably in the single digit range, for example JPM is currently at 7.13.  Whether this signals a valuation play is highly questionable however as the Europe financial crisis has yet to fully play out and no one is yet certain of the exposure these companies have to the new toxic EU country bonds.

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