Tech Is Still The Momentum Leader For US Equity Sectors

The US stock market has suffered a rough ride so far in 2018, but technology shares remain the strongest trend performer for the major US equity sectors, based on a set of exchange-traded funds through yesterday’s close (May 22).

Technology Select Sector SPDR (XLK) is up 8.8% so far in 2018, edging out the second-strongest 8.5% year-to-date gain in energy via Energy Select Sector SPDR (XLE). For the one-year change, XLK’s edge is even stronger: 26.4% vs. 23.0% for the runner-up performance in Financial Select Sector SPDR (XLF).

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On the flip side, consumer staples have the biggest year-over-year setback for sectors. The Consumer Staples Select Sector SPDR (XLP) is down 8.4% for the trailing one-year total return through Tuesday.

The tailwind for stocks in general, although battered in recent history, remains solidly positive. The broad equity market is up more than 15% for the past year, based on the total return for the SPDR S&P 500 (SPY).

Tech’s leadership has been uneven this year, but XLK’s momentum remains unchallenged for now, as the performance chart below reminds (black line at top).

A challenger to throne may be emerging in energy stocks, however. Ranking the sector ETFs by current price relative to 200-day moving average shows that Energy Select Sector SPDR (XLE) is in the leadership position, edging out XLK’s second-rank status.

Profiling the sectors via drawdown shows that telecommunications stocks are posting the deepest peak-to-trough declines as of Tuesday’s close. Vanguard Telecommunication Services (VOX) has fallen more than 16% from its previous summit. Tech, by contrast, has the smallest drawdown: XLK’s slide from its previous peak currently ranks at a slight 1.6%.

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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