Good question from Jay this morning: 

“You showed the sector breakdown of the S&P 500, but how have those sectors performed since the financial crisis?”

Remember the S&P 500 is a market capitalization index so the weightings in the index vary based on the size of the company.  Since several of the largest companies in the world are technology companies, that makes it the largest sector in the index.  The performance of Apple, Google, Amazon, Microsoft, Facebook, etc are instrumental in the performance of the S&P as a whole. 

 But our friend Jay  (and maybe you as well)  wants to see how those sectors have performed on a longer time horizon.  Here’s the top and bottom since January 1st, 2007: 

Not too surprising that the top performers are fairly close in performance.  We can see technology is leading the pack, but just by a small margin over healthcare.

There’s a little more separation in the bottom performers. 

Financials got crushed in the 2008 crisis and despite doing quite well in the last several years, starting from such a low point they are still lagging pretty far behind.

And the energy sector was soaring until the price of oil collapsed and took it from one of the leading performers to the worst in the last few years.  Oil has stabilized a little bit since then but it’s still a long way from it’s previous glory.

Technology is the big one to keep an eye on.  Considering how strong this bull market rally has been since the election, actually the breadth of components isn’t that strong.  That means it’s actually a relatively small number of names names that are pulling the rest of the index up higher than the overall breadth would suggest.  Technology is the largest sector weighting, and technology is on fire this year. 

If the markets are going to take a breather anytime soon, it’ll probably need a little bit of extra help from the technology sector.  Can Apple, Google and Amazon just keep raging higher?  We’ll see 

 

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