A new king has been crowned out of the ten sectors of the S&P 500, while the old one has fallen hard. We've highlighted historical sector weightings of the S&P 500 a few times in the past, and the Financial sector has always made up the biggest portion of the overall index in our posts. However, after the big declines in Financial market caps over the last year, the sector has fallen all the way down to the number 5 spot in terms of sector weight!
Technology has taken over the number one spot with a weighting of 16% in the S&P 500, followed by Health Care, Energy, and Consumer Staples. In the charts and tables below, readers can see how sector weightings in the S&P have changed over time going back to 1990. It's interesting to see how the weightings shift based on which areas are the main drivers of the US economy at the time. In the early 90s, Industrials and Consumer sectors made up the biggest portion of the index. Then Technology took over during the Internet bubble, and Financials reigned supreme during the credit heyday of the 2000s. Energy made a big move as oil rose over the past few years, but the large drop in oil recently has stopped the sector from taking over the index. The current leaders of the index (Tech, Health Care) are there by default, and more a function of other sectors falling out of favor instead of them leading the economy.
In the individual sector charts below, we highlight their historical weightings along with their average weightings since 1990. These weightings get overbought and oversold just like a stock's price, and when sectors move well above or below their averages, a reversion to the mean is usually in store. Currently, Health Care and Energy are well above their historical averages, while Consumer Discretionary and Telecom are the most oversold. The Financial sector has moved below its long-term average, and the biggest sector, Technology, is just above its long-term average.
Thx for the charts below cause I am color blind
Posted by: Max | January 16, 2009 at 07:49 PM