The charts below show the relative strength of each S&P 500 sector versus the index itself over the last year. In each chart, a rising line indicates that the sector is outperforming the S&P 500 (declining line indicates underperformance). We have also included a black dot indicating the day of the recent peak in the S&P 500 on January 19th. This allows investors to more easily see which sectors have been holding up the best since the market peaked.
As shown in the charts, two sectors that have done their best to keep the market afloat are Consumer Discretionary and Consumer Staples. The outperformance of these two sectors suggests that the outlook for the American consumer may not be as bad as many assume. On the downside, the market has been led lower by Technology, Materials, and Energy. The weakness in Energy and Materials has been attributed to the strong dollar and China's effort to reign in bank lending. The weakness in Technology, however, is a bit more puzzling. Most companies in this sector have reported great earnings and given positive outlooks, but their stocks have been weak. Are these stocks just correcting after their stellar performance last year, or are they signaling trouble on the horizon?
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