It is often said that the market can't rally without the financials, but that was when the sector was almost a quarter of the index. As yesterday's trading showed, rallies without the financials are becoming increasingly common. Even as the S&P 500 rose by over 2% on Wednesday, the Financial sector declined! Since daily sector data begins in 1989, yesterday was only the 13th time that the S&P 500 rose by more than 1% on a day when the Financial sector was down. Even more notable was the fact that yesterday's decline was the first ever occurrence where the Financial sector declined on a day when the S&P 500 rose by over 2%. Usually on a 2% day, almost everything goes up! Yesterday, though, of the 61 stocks in the index that finished the day lower, 21 were in the Financial sector.
As shown, rallies without the financials are becoming increasingly common. Of the thirteen instances since 1989, four have come during the last six months. That's what happens when a sector that was once over 20% of the S&P 500 now makes up less than 10%.
Comments