All of the component sectors of the SPDR S&P 500 ETF (SPY) turned red on Friday, December 18. Concerns of a global economic slowdown caught investors’ attention again following the long-awaited rise in the interest rates. This resulted in a sell-off in SPY’s major sectors on the day.
The above graph shows the percentage changes in SPY’s sectors on December 18.
Stocks of the financial sector and the financial services sector were the biggest drag on SPY on Friday. The rise in the Fed’s key rate boosted these sectors on December 15–16 during the FOMC (Federal Open Market Committee) meeting. The anticipation of growth in the profit margins of lending banks with the rise in its interest rates made these sectors as a very attractive investment avenue. However, the stocks’ rally ended on December 17. After the Fed’s decision on monetary policy was through, these sectors lost their appeal on Friday. As a result, stocks of major banks like Goldman Sachs (GS), Morgan Stanley (MS), JPMorgan Chase (JPM), Citigroup (C), and Bank Of America (BAC) fell by 3.9%, 3.4%, 2.8%, 3.1%, and 3.1%, respectively, on December 18.
The material sector moved along with the broad market movement. However, the sector’s noticeable fact was that the basic metals and the precious metals gained on the day. The metals’ respective ETFs Gold (GLD), Silver (SLV), Copper (CPER), and Steel (^STEEL) rose by 1.5%, 2.6%, 2.9%, and 0.2%, respectively, on December 18. Therefore, their mining companies’ stocks rose on the day due to the rise in the metal prices. The stocks include Newmont Mining (NEM), Freeport-McMoRan (FCX), Nucor (NUE), Owens-Illinois (OI), and Alcoa (AA). They rose by 0.6%, 1.5%, 1.0%, 0.8%, and 0.9%, respectively, on the day.
Other commodities like fertilizers and agricultural chemicals also benefited from the fall in the US dollar on Friday. The stocks of FMC (FMC) and CF Industries Holdings (CF) rose by 1.0% and 0.9%, respectively, on December 18.
Next, we’ll perform a moving average analysis on the healthcare sector as of December 18.