Sector Performance: Not What You'd Expect

On a day when the credit crisis has clearly reached global proportions, one would expect the Financials to be leading the market lower.  However, as of mid-day today, three other sectors are doing worse than the Financials.  As shown to the right, Energy, Technology, and Materials are all doing worse than the Financial sector.  Additionally, since July 15th the Financial sector is by far the best performing sector, and only one of three sectors with positive returns.

Looking at the relative strength of the Financial sector versus the S&P 500 so far in 2008 shows that while they have made up for lost ground over the last two months, the Financials are still underperforming the overall market by a significant margin. (In the charts below, rising lines indicate that the sector is outperforming the S&P 500, while a falling line indicates underperformance.)

 

More specifically though, banks have been doing much better than the Financial sector.  Even more surprising is that the KBW Bank Index (BKX) is actually performing inline with the S&P 500 so far in 2008.  When stocks most associated with the problems aren't the ones leading the market lower, investors should take notice.

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