Sector Weightings; Financials Move From 6th to 2nd

The weighting of the Financial sector in the S&P 500 has made a huge move since the March lows.  After being the biggest sector of the market for six years in a row, the weight of the Financials dropped all the way down to 8.9% (6th place) on March 9th, 2009.  After the recent rally we've had, the Finanial sector has nearly doubled its weight to 15%, and it now ranks 2nd behind the Technology sector (18.8%).  Technology, Financials, Industrials, Consumer Discretionary, and Materials are sectors that have gained market share during the bull market, while the other five sectors have lost share.  The Financial sector has gained the most, while Health Care has lost the most (16.1% to 12.5%).

The charts below highlight historical S&P 500 weightings for each sector going back to 1990.  The red lines in the charts represent the historical average for each sector.  As shown, the Financial sector dropped well below its average during the collapse, but it has moved all the way back up to its average in just 7 months.  Technology remains above its average and has been trending upward, while Energy, Consumer Staples, and Health Care are above their averages but trending downward.  Industrials, Consumer Discretionary, and Materials are below their historical averages but trending upward, while Utilities and Telecom are below their averages and trending downward.

 

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Comments

[admin]

Very good point. It makes sense since those two sectors )technology and financials) have rallied the most and appreciated the most.

Unless there is a correction in these two sectors, it is unlikely to see an overall market correction. the bull market that started in March remains intact (at least so far.)

adminat http://invetrics.com