All of SPY’s Sectors Ended in the Red as Oil Struggles Persisted



Sector performances

The following graph illustrates the changes in the component sectors of the SPDR S&P 500 ETF (SPY) as of January 13.

As seen in the graph, all the sectors of the SPY turned red on the day. Stocks belonging to the consumer discretionary sector, the technology sector, and the energy sector were majorly hit. The healthcare sector comprises of highly volatile stocks that are very sensitive to the broad market movement. This sector also plunged 3.0% on Wednesday.

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The only sector where stocks are considered to be defensive owing to the low beta values is the utility sector. During volatile times, investors turn to this sector, as it comprises of stable cash-paying and less volatile stocks. Therefore, we see the least percentage change in the performance of this sector. Multi-utilities stocks CMS Energy (CMS), DTE Energy (DTE), SEMPRA Energy (SRE), Consolidated Edison (ED), and Southern (SO) managed positive returns on the day. These stocks gained 0.6%, 0.8%, 1.5%, 1.8%, and 0.8%, respectively, on January 13.

New lows for oil

According to the petroleum status report for the week ended January 8, 2016, released by the Energy Information Administration (or EIA), crude oil inventory went up by 0.2 million barrels. Similarly, gasoline and distillates’ weekly inventory rose 8.4 million and 6.1 million barrels, respectively, where demand has been soft due to the warm winter.

The rise in crude inventories to this level when the global demand still seems weak and speculation about Iran’s surging oil exports are worrying investors. WTI crude oil went up ten cents and settled at $30.58 in the wake of improved Chinese trade data for December 2015, which was released on Wednesday by the Finance Ministry. On the other hand, Brent crude dropped 29 cents to close at $29.99 per barrel on January 13. Thus, investors refrained from investing in energy stocks on January 13.

In the next article, we’ll look at the performance of the technology sector and its moving averages.


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