Everything’s down, but discriminating among equity sectors still has its merits. In fact, one could reason that selectivity becomes that much more critical if the downturn in the stock market is more than just a temporary setback. Genius is a bull market, an observation that’s delivered no small advantage in recent years. But an eye for finding pearls among swine may be due for a comeback as a favored investment skill.
As you might expect, the broad-based selling of late has dispensed varying degrees of red ink across the ten major sectors that comprise the S&P 500, as the chart below illustrates. So far in May, information technology has suffered the biggest loss, tumbling 7% this month through last night’s close, according to Standard & Poor’s. The relatively conservative utilities, by contrast, have been pinched the least, posting a stumble of just two-tenths-of-one-percent. Overall, the stock market (measured by the S&P 500) has shed 2.5% in May.
In the search for investment justice, some may look for signs that the highest flyers of the large-cap equity sectors so far this year have taken the toughest punishment this month. But the record is mixed on that score. Indeed, the worst-performing sector (information tech) in May is also the big loser year to date through yesterday. Meanwhile, the second-biggest year-to-date winner–industrials–has endured one of the milder sell offs so far this month.
Justice, such as it is, is most obvious among the energy stocks. As the leading performing sector in 2006, energy has taken one of the sharper tumbles in May, falling 5.7% so far this month.