All the component sectors except utilities in the SPDR S&P 500 ETF (SPY) fell in yesterday’s trade. The energy sector was the biggest drag on SPY. (Read Crude Inventories Pull Energy Sector Down, Utilities Soar). The following graph shows yesterday’s percentage changes for SPY’s component sectors.
The Energy Select Sector SPDR Fund (XLE) and the Materials Select Sector SPDR Fund (XLB) fell 2.5% and 2.0%, respectively, in yesterday’s trade. The supply glut in the oil market and the rising US dollar led oil prices to fall.
Materials sector woes
Dollar-denominated commodities suffered yesterday due to the rising dollar. As a result, ETFs that invest in precious and industrial metals futures and in miners were hit the hardest on the day. Gold (GLD), copper (CPER), silver (SLV), and steel (STEEL) fell 2.2%, 1.7%, 3.0%, and 2.8%, respectively, in yesterday’s trade. Along with the metals, mining companies Freeport-McMoRan (FCX), Newmont Mining Corporation (NEM), and Alcoa (AA) fell 8.5%, 7.7%, and 1.0%, respectively.
Concerns about the global slowdown and the domestic industrial and manufacturing scenario led to the fall of the industrial and materials stocks. Pentair (PNR), Caterpillar (CAT), and Quanta Services (PWR) fell 4.3%, 4.2%, and 4.1%, respectively.
According to the U.S. Bureau of Labor Statistics, the number of jobless claims for the week ending December 12, 2015, fell from 282,000 to 271,000, which is within the consensus range. This points to stable, healthy labor market conditions.
The general business conditions index for December 2015 came in below the lower end of the consensus estimate. The reading came in at -5.9, as compared to the prior reading of 1.9, according to the Philadelphia Fed’s manufacturing survey. The reading implies a weak manufacturing sector, which also added to the concerns of investors regarding the industrial and materials sectors.
In the next part of this series, we’ll look at SPY’s top- and bottom-performing stocks in yesterday’s trade.