We have now reached the last leg of 2019 and it’s been a rewarding year so far for Wall Street. The key U.S. index S&P 500 has added as much as 26.3% this year (as of Dec 13, 2019). Key events of this year were Fed rate cuts and a phase-one U.S.-China trade deal after almost two-years of wrangling.
No wonder, investors would be interested in knowing how each sectors of the S&P 500 has performed this year. Investors should note that as of September 2018, the S&P 500 was
divided into 11 sectors with their respective weightings by market capitalization. Below we highlight the performance of those key S&P 500 sectors in 2019. Technology: Weight 20.8% -- Technology Select Sector SPDR Fund XLK – Up 44.3% YTD
The technology corner of the broad U.S. stock market has been a clear winner this year despite occasional trade tensions. The emergence of cutting-edge technology is acting as key catalysts. This went in favor of technology ETFs like XLK. The fund XLK is heavy on Apple (up 74.2% YTD) and Microsoft (up 52.8%) with each carrying more than 19% of the basket. This explains stellar gains in XLK in 2019 (read:
After a Sweet November, Apple ETFs Are Set for a Warm December). Health Care: Weight 14.9% -- Health Care Select Sector SPDR Fund ( XLV Quick Quote XLV - Free Report) – Up 18.4%
The sector maintained a low-profile in the first three quarters of the year only to take a spurt from the fourth quarter. Decent earnings, solid drug data, healthy flow of FDA approvals, a solid merger & acquisition environment have been driving the sector in recent months (read:
Deal or No Deal: Healthcare ETFs to Make a Sweep in 2020). Financials: Weight 13.7% -- Financial Select Sector SPDR Fund XLF – Up 27.9%
This sector has also remained range-bound in the first three quarters of the year and staged an uptrend from October on a steepening yield curve, compelling valuation and favorable earnings. Solid dividend payout is another positive in the space (read:
Why Bank ETFs May Soar in 2020). Consumer Discretionary: Weight 10.2% -- Consumer Discretionary Select Sector SPDR Fund XLY – Up 23.5%
This sector has recorded a steady uptrend throughout the year. Low rates, a 50-year low unemployment rate, soaring stocks and cheap energy prices have resulted in solid gains for discretionary stocks. Per a BMO strategist, “
Consumer Discretionary, far and away, has the highest estimated long-term EPS growth expectations among S&P 500 sectors (read: 2 Sectors & Their ETFs Are Hot Picks for 2020).” Communication Services: Weight 9.9% -- Communication Services Select Sector SPDR Fund XLC – Up 25.7%
This fund invests about 44% of its weight in Facebook (up 45% YTD) and Alphabet (27.9%). Other stocks like Disney, AT&T, Activision Blizzard have also delivered solid returns and drove the fund in 2019. However, Netflix’s subdued gains kept the fund from soaring further (read:
ETFs in Focus on Dull 2020 Subscriber Outlook for Netflix). Industrials: Weight 9.7% -- Industrial Select Sector SPDR Fund XLI – UP 26.2%
The Fed cut rates thrice this year since July, which led to low rates for the most part of the year. This along with U.S.-China trade deal hopes favored industrial ETF XLI (read:
Fed to Not Hike Rates in 2020: ETF Areas to Shine). Consumer Staples: Weight 6.7% -- Consumer Staples Select Sector SPDR Fund XLP – Up 24.4
Being defensive in nature, the consumer staples sector benefited from occasional trade tensions this year. This sector also performs well in a low-rate environment. Decent earnings picture and rising food inflation have given a boost to the staples companies (read:
5 ETFs & Stocks to Profit From One-Year High U.S. Inflation). Materials: Weight 2.5%-- Materials Select Sector SPDR Fund XLB – Up 19%
Though cost pressure has been a drag on the space, broader risk-on trade sentiments and U.S.-China trade negotiations have lent a hand to the materials sector.
Real Estate: Weight 2.7% -- The Real Estate Select Sector SPDR Fund XLRE – Up 24.1%
Low rates backed by Fed rate cuts, solid rental growth and a steadily-growing U.S. economy have favored the fund. The fund’s benchmark-beating yield is another positive.
Utilities: Weight 2.8% -- Utilities Select Sector SPDR Fund XLU – Up 21.8%
This is yet another sector which thrives on low rates as it is capital-intensive in nature. Solid dividend yields of the sector is a tailwind. Plus, the U.S. utilities sector is thriving on several developments. One of the most significant developments in the space is the “
awareness of energy efficiency programs, and implementation of the same in residential and commercial buildings and industrial plants.” Energy: Weight 6.0% -- Energy Select Sector SPDR Fund XLE – Up 3.1%
Energy stocks are clear underperformers despite about 25% jump in U.S. crude prices. Acute earnings pressure wreaked havoc on the space.
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