Surveying This Year’s Stock Market Damage Through A Sector Lens

It’s been a brutal year to date for US stocks, but the pain varies substantially from sector to sector, based on a set of exchange traded funds as of Thursday’s close (Mar. 19). Consumer staples, tech and health care are suffering the least among the main sectors that comprise the US market. Energy, by comparison, is deep in the hole, posting the biggest loss by far in the sector space.

Consumer Staples Select SPDR (XLP) is the current leader by way of posting the smallest year-to-date loss: a relatively modest 14.4% decline. The softer setback is linked to the view that companies in this sector are selling products that are considered essential to day-to-day life and therefore are mostly immune to the coronavirus blowback that’s roiling the economy.

Stocks in the consumer staples sector tend to be lower beta-risk shares, notes John Petrides at Tocqueville Asset Management. “They’re less volatile. They have higher yields. So, in an environment where global bond yields have really collapsed, people are looking for income,” he advises. “Those three trends are really holding this group higher.”


How is recession risk evolving? Monitor the data with a subscription to:
The US Business Cycle Risk Report


Petrides also predicts that “if we do have a market rebound from here on out, I would assume this group would probably be a relative underperformer.”

Energy, by contrast, has been crushed so far in 2020. Energy Select Sector SPDR (XLE) is down 57.4% year to date—the biggest decline by far. The outlook for a deep and perhaps short recession is driving the negative sentiment for energy shares. The challenges that energy companies face in the near term starts with the collapse in crude oil’s price. West Texas Intermediate, the US benchmark, has fallen from the low-$60 range in January to under $21 at one point this week.

“A sustained drop in oil prices would cost the sector 50,000-75,000 jobs if employment returned to its low from a few years ago,” predicts Nathan Sheets, chief economist at PGIM Fixed Income.


Learn To Use R For Portfolio Analysis
Quantitative Investment Portfolio Analytics In R:
An Introduction To R For Modeling Portfolio Risk and Return

By James Picerno


3 thoughts on “Surveying This Year’s Stock Market Damage Through A Sector Lens

  1. Pingback: Brutal Year to Date for US Stocks - TradingGods.net

  2. Bob Landry

    Why are your book recommendations almost exclusively anti-market or anti-business screeds? I understand wanting to offer a variety of viewpoints, but I would expect a site such as yours to be a champion of competitive markets and business in general.

  3. James Picerno Post author

    Bob, first, the books listed aren’t’ recommendations–rather, the titles reflect recently released books. No agenda, other than to highlight what’s new. In fact, quite a few pro-market books have found their way to Book Bits over the years. Is there a new book you think deserves attention that’s not shown?
    –JP

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.