Below we highlight the relative strength of each to the ten S&P 500 sectors over the last year. In each chart, rising lines indicate periods where the sector is outperforming the S&P 500. Charts with red shading indicate that the sector has underperformed the S&P 500 over the last year. Finally, in each chart we have also included red dots which indicate the three Fed rate cuts since August.
Of the ten sectors, only two (Consumer Discretionary and Financials) have underperformed in the last year, and neither of these sectors have seen any noticeable benefit from the three Fed rate cuts. Interestingly, the three sectors which have been the most positively impacted are Consumer Staples, Health Care, and Utilities, which are all defensive in nature. This implies that at this point in the easing cycle, investors are not too optimistic that the Fed rate cuts will boost the economy.
Great charts.
It goes against what alot of people expect following Fed cuts.
Nicely done . . .
Posted by: Barry Ritholtz | December 02, 2007 at 05:20 PM