blog

Latest from the Quantamize Blog

How the S&P 500 Stacks Up Against its Underlying Sectors in the Last 10 Years

Nov 28, 2018

 

  • Our focus today is the S&P 500 and its underlying sectors over the last 10 years as we attempt to understand what is driving US large-cap stocks.
     
    • The S&P 500 Index generated a total return of 273.44% over the last 10 years. This year, the S&P 500 Index is up 2.1% YTD on a total return basis and down 0.9% MTD on a total return basis, as of yesterday's close.
       
  • Although one would expect that tech stocks have driven the S&P 500’s performance over the last 10 years, consumer discretionary stocks are actually the top performers, generating a total return of 505.14% since 11/27/2008.  
     
    • The outperformance by consumer discretionary stocks in the S&P 500 over the last 10 years was aided by a rebounding US economy that enabled consistent q/q discretionary spending growth. Since 4Q2009, US discretionary spending has increased in every quarter.  
       
    • Although S&P 500 tech stocks lagged S&P 500 consumer discretionary stocks on a 10-year basis, S&P 500 tech stocks largely outperformed all other sectors over the last 5 years, generating a total return of 123.51%. 
       
  • Energy stocks have been the largest laggards over the last decade, generating a total return of just 79.73% since 11/27/2008. Notably, the S&P 500 energy sector generated a total return of –13.88% over the last 5 years. 
     
    • Underperformance by energy stocks in the last 10 years can be attributed to falling oil prices in 2014, 2015, and 2016. As can be seen in the chart below, crude oil prices tanked 75.56% from a high of USD$107.26/bbl on 6/20/2014 to a low of USD$26.21/bbl. The S&P 500 energy sector closely followed crude oil prices, falling 44.91% from a high of USD$1,153.61/share on 6/23/2018 to a low of USD$635.47/share on 1/20/2016.
       
    • The S&P 500 energy sector was predominantly dragged lower amid falling oil prices by oil and gasoline E&P stocks. As can be seen in the chart below, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 71.67% from a high of USD$83.30/share on 6/20/2014 to a low of USD$24.11/share on 2/24/2016. 

 

Source: Bloomberg
S&P 500 GICS Sectors 1D Change 5D Change MTD (TR) 30D Change T3M (TR) YTD (TR) 12M (TR) 3Y (TR) 5Y (TR) 10Y (TR)
S&P 500 CONS DISCRET INDEX 2.59% 0.97% -0.77% 0.53% -10.18% 6.19% 11.08% 32.99% 72.01% 505.14%
S&P 500 CONS STAPLES INDEX 0.04% -2.13% -0.06% 2.12% 3.15% -1.17% 3.32% 20.78% 46.92% 208.09%
S&P 500 INFO TECH INDEX 2.25% -0.18% -5.24% -3.61% -12.34% 5.19% 3.69% 62.81% 123.51% 477.88%
S&P 500 FINANCIALS INDEX 2.10% -0.86% 1.10% 5.11% -6.64% -3.60% 3.18% 41.49% 67.30% 219.63%
S&P 500 HEALTH CARE INDEX 1.01% -0.36% 3.02% 4.55% -0.51% 12.12% 13.73% 33.98% 79.75% 346.69%
S&P 500 INDUSTRIALS INDEX 0.83% -0.81% 0.30% 1.42% -9.14% -6.22% -0.42% 31.42% 50.54% 270.04%
S&P 500 ENERGY INDEX 1.72% -3.31% -3.66% -2.70% -12.67% -8.13% -1.84% 4.13% -13.88% 79.73%
S&P 500 UTILITIES INDEX 0.54% -1.33% 2.20% 2.73% 3.93% 7.02% 1.78% 43.13% 72.25% 177.25%
S&P 500 MATERIALS INDEX 1.19% -0.94% 1.38% 4.77% -10.71% -10.73% -7.84% 23.72% 32.38% 200.09%
S&P 500 COMM SVC INDEX 1.93% 0.46% -3.49% -0.63% -6.54% -8.35% 3.00% 14.67% 18.17% 120.02%

10-Year Cumulative Return of the S&P 500 Index, S&P 500 Energy Sector, and SPDR Oil & Gas Index vs. Crude Oil Prices

Source: Capital IQ