Financials Rebound As Tech Stumbles

The recent revival in shares of financial stocks has lifted this corner of the US equity market to the top-performing sector for one-year performance, based on a set of ETFs. The change in leadership is also a function of technology’s latest stumble – a slide that’s trimmed the formerly first-place sector’s performance to third for one-year results.

Financial Select Sector SPDR (XLF) is currently posting a 35.3% total return for the trailing 12-month period, the strongest one-year gain for US sectors, as of Sep. 26. XLF’s return to the winner’s circle follows a month-long decline that began to reverse in mid-September.

Meanwhile, tech’s bull run has eased in recent days, albeit only modestly so far. Although Technology Select Sector SPDR (XLK) is posting on a healthy 24.9% one-year total return, the ETF’s performance rank has eased to third place for the 12-month trend, behind finance and industrials via Industrial Select Sector SPDR (XLI), which has rallied sharply in recent weeks.

The only sector currently posting a loss at the moment: US real estate investment trusts (REITs). Vanguard REIT (VNQ) is down 1.8% through yesterday’s close vs. the year-earlier level.

Meantime, the US stock market overall is posting solid gain vs. the year-earlier, based on SPDR S&P 500 (SPY). The ETF is ahead by 18.6% for the past 12 months (red line in chart below), outperforming seven of the eleven sectors.

XLF’s renewed dominance for the trailing one-year period is conspicuous in the next chart (black line at top).

Ranking the sector ETFs by current price relative to 200-day moving average tells a somewhat different story. Healthcare stocks continue to hold the top spot by this standard. The current price premium for Health Care Select Sector SPDR (XLV) over its 200-day average is 7.8%, edging out the number-two premium – the tech sector via XLK – by a hair.

Profiling sector results based on via one-year Sharpe ratio (SR) shows that industrial shares are now in the lead for risk-adjusted performance. By this gauge, XLI’s 2.6 SR leads the field over the past 12 months – modestly above the broad stock market’s 2.5 SR via SPDR S&P 500 (SPY).

For additional research on the sector ETFs cited above, here are links to the summary pages at

Consumer Discretionary (XLY)
Consumer Staples (XLP)
Energy (XLE)
Financial (XLF)
Healthcare (XLV)
Industrial (XLI)
Materials (XLB)
Technology (XLK)
Utilities (XLU)
Telecom (VOX)
Real Estate Investment Trusts (VNQ)

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