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Markets in a Minute

All S&P 500 Sectors and Industries, by Size

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S&P 500 Sectors and Industries

S&P 500 Sectors and Industries

All of the S&P 500 Sectors and Industries, by Size

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The S&P 500 is one of the most widely quoted stock market indexes, but do you know how it’s comprised? From soft drinks to semiconductors, the benchmark index tracks an extremely wide variety of industries across the U.S. economy.

In this Markets in a Minute chart from New York Life Investments, we show every sector and its underlying industries by size.

A Sector View

At a high level, the S&P 500 tracks broad segments of the economy known as sectors. Here’s how the percentage allocation in the index breaks down:

SectorPercent of S&P 500 Index
Information Technology27.48%
Health Care14.58%
Consumer Discretionary11.18%
Communication Services10.90%
Financials9.89%
Industrials7.90%
Consumer Staples7.05%
Utilities3.13%
Real Estate2.80%
Materials2.56%
Energy2.53%

Data as of July 31, 2020.

Information technology, which makes up almost 28% of the index, has outperformed other sectors by a wide margin so far in 2020. At the other end of the spectrum, real estate, materials, and energy each make up less than 3% of the index.

Diving Deeper: An Industry View

While investors are likely familiar with sectors, the specific underlying industries may be lesser known. Below is a complete industry breakdown of the S&P 500.

Click “Next” to view industry breakdowns of each sector

SectorIndustry% of Sector
Communication Services
Advertising0.63%
Alternative Carriers0.32%
Broadcasting1.23%
Cable & Satellite9.86%
Integrated Telecommunication Services15.22%
Interactive Home Entertainment4.18%
Interactive Media & Services51.52%
Movies & Entertainment14.69%
Publishing & Printing0.22%
Communication Services (cont'd)Wireless Telecommunication Services2.12%
Consumer Discretionary
Apparel Retail3.39%
Apparel, Accessories & Luxury Goods1.27%
Auto Parts & Equipment0.94%
Automobile Manufacturers1.89%
Automotive Retail2.97%
Casinos & Gaming0.98%
Computer & Electronics Retail0.75%
Consumer Electronics0.47%
Consumer Discretionary (cont'd)Department Stores0.10%
Distributors0.71%
Footwear4.00%
General Merchandise Stores4.40%
Home Furnishings0.33%
Home Improvement Retail13.16%
Homebuilding2.19%
Hotels, Resorts & Cruise Lines2.05%
Household Appliances0.34%
Housewares & Specialties0.21%
Consumer Discretionary (cont'd)Internet & Direct Marketing Retail47.65%
Leisure Products0.31%
Restaurants10.44%
Specialized Consumer Services0.09%
Specialty Stores1.36%
Consumer Staples
Agricultural Products1.25%
Brewers0.37%
Distillers & Vintners2.23%
Drug Retail1.57%
Consumer Staples (cont'd)Food Distributors1.41%
Food Retail1.43%
Household Products26%
HyperMarkets & Super Centers17.15%
Packaged Foods & Meats14.79%
Personal Products2.39%
Soft Drinks21.13%
Tobacco10.28%
Energy
Integrated Oil & Gas50.88%
Energy (cont'd)Oil & Gas Equipment & Services8.13%
Oil & Gas Exploration & Production20.30%
Oil & Gas Refining & Marketing11.51%
Oil & Gas Storage & Transportation9.18%
Financials
Asset Management & Custody Banks8.08%
Consumer Finance4.40%
Diversified Banks27.43%
Financial Exchanges & Data11.91%
Insurance Brokers5.77%
Financials (cont'd)Investment Banking & Brokerage6.63%
Life & Health Insurance4.08%
Multi-line Insurance1.84%
Multi-Sector Holdings14.23%
Property & Casualty Insurance7.41%
Regional Banks7.91%
Reinsurance0.33%
Health Care
Biotechnology15.66%
Health Care Distributors1.65%
Health Care (cont'd)Health Care Equipment25.73%
Health Care Facilities1.06%
Health Care Services4.80%
Health Care Supplies1.64%
Health Care Technology0.54%
Life Sciences Tools & Services8.56%
Managed Health Care11.30%
Pharmaceuticals29.08%
Industrials
Aerospace & Defense20.41%
Industrials (cont'd)Agricultural & Farm Machinery2.58%
Air Freight & Logistics7.85%
Airlines2.27%
Building Products5.57%
Construction & Engineering0.78%
Construction Machinery & Heavy Trucks6.61%
Diversified Support Services2.09%
Electrical Components & Equipment5.66%
Environmental & Facilities Services3.20%
Human Resource & Employment Services0.27%
Industrials (cont'd)Industrial Conglomerates13.56%
Industrial Machinery10.12%
Railroads11.13%
Research & Consulting Services4.11%
Trading Companies & Distributors2.48%
Trucking1.32%
Information Technology
Application Software8.79%
Communications Equipment3.42%
Data Processing & Outsourced Services15.67%
Information Technology (cont'd)Electronic Components0.74%
Electronic Equipment & Instruments0.53%
Electronic Manufacturing Services0.48%
Internet Services & Infrastructure0.54%
IT Consulting & Other Services4.27%
Semiconductor Equipment1.95%
Semiconductors15.10%
Systems Software24.00%
Technology Distributors0.22%
Technology Hardware, Storage & Peripherals24.29%
Materials
Commodity Chemicals6.71%
Construction Materials4.11%
Copper2.71%
Diversified Chemicals1.46%
Fertilizers & Agricultural Chemicals6.71%
Gold8.02%
Industrial Gases27.73%
Metal & Glass Containers3.47%
Paper Packaging8.80%
Materials (cont'd)Specialty Chemicals28.45%
Steel1.82%
Real Estate
Health Care REITs6.78%
Hotel & Resort REITs1.00%
Industrial REITs12.24%
Office REITs5.85%
Real Estate Services1.94%
Residential REITs11.20%
Retail REITs7.51%
Real Estate (cont'd)Specialized REITs53.48%
Utilities
Electric Utilities62.41%
Gas Utilities1.53%
Independent Power Producers & Energy Traders1.20%
Water Utilities3.15%
Multi-Utilities31.71%

Data as of July 31, 2020.

In total, the S&P 500 tracks 126 industries, and each one presents unique risks and opportunities.

Biotechnology, which focuses on novel drug development and clinical research for treating diseases, has gained renewed interest during the COVID-19 pandemic. While successful drugs can offer high potential returns, about 90% of clinical programs ultimately fail. Investors can screen potential companies for various factors including corporate sponsor support, ample long-term funds, and a pipeline with more than one product.

Another example is aerospace and defense. Due to the high barriers to entry and significant funding from the U.S. government, this can be an attractive industry for investors. However, it can be impacted by the current government’s defense policies. For example, the aerospace and defense industry performed well after President Donald Trump was elected, and it may be influenced by the November 2020 election results.

The Big Picture

With a full view of the S&P 500 sectors and industries, investors can get a better idea of the opportunities within U.S. large cap stocks. However, it’s worth noting that it is not possible to invest directly in an index. Investors can put funds in these industries by purchasing stocks directly, or through managed products such as ETFs and mutual funds that track index performance.

By exploring every corner of the economy, investors can take advantage of growth potential in various areas—not just those trending in the news cycle.

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Markets in a Minute

Should a U.S. Election Affect Your Asset Mix?

Election jitters prompt investors to put their money in low-risk assets. We analyze why this may not be the best idea for your portfolio’s asset mix.

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Should an Election Affect Your Asset Mix?

U.S. elections are a powerful force in investor psychology.

In fact, historically, investors pour more money into low-risk assets than equity investments surrounding election season. Following election years, investors reverse course and put their money back into equities.

This Markets in a Minute chart from New York Life Investments shows how investors have reacted to U.S. presidential elections over time, and why maintaining your long-term asset mix may be a better course of action.

Market Behavior During U.S. Elections

While investors allocated funds into safe assets in election years, what happened to the market?

 Average S&P 500 Returns in Presidential Election Years (1928-2016)
New president is elected9.3%
Incumbent president win13.4%
All election years11.3%

Source: Morningstar (Dec, 2019)

On average, the market has returned 11.3% in election years over the last century.

Markets also appear to prefer familiarity—when the incumbent president won, the S&P 500 averaged higher returns. Alongside this, it made no difference if a Democrat or Republican candidate won.

Implications for the 2020 Election

Still, with mail-in voting controversy and the anticipation of a results dispute, the 2020 presidential run has stoked greater volatility in financial markets. What reference point can we make to previously contested results?

Following the 2000 results between Al Gore and George Bush, investor fear ran rampant. Markets fell 1.6% when no winner was clearly determined. Compare this to the 2016 presidential run, when markets jumped 1% the day after the election.

But while short-term impacts of U.S. elections cause heightened uncertainty, it’s important to analyze if it’s an emotional or rational decision being made in response to market unrest.

Opportunity Costs

While investors typically run to safe-haven assets during these cycles, the table below illustrates how this may be less optimal for their portfolios.

 U.S. Treasury Bill (T-Bill) Rates
8 Week T-bill0.09%
26 Week T-bill0.11%
52 Week T-bill0.13%

Source: U.S. Treasury (Dec, 2020)

Instead of paying attention to unknown variables inherent in every market, investors can focus on what the numbers are saying.

Building a Resilient Portfolio

So how can investors stay the course during election season?

Broad historical trends show that in spite of unique events, money in the stock market positively increases over time. Staying invested in your long-term asset mix can help capture these overarching trends.

One-off events such as an election provide an opportunity to take advantage of temporarily lower prices. This, coupled with the higher volatility levels that accompany election cycles, offer an avenue for your portfolio to be more resilient as it helps strengthen portfolio returns.

The diminishing returns of cash compound this effect. Over the last decade, cash returned close to 0%. These return rates could fall even lower in the years ahead as interest rates decline.

In short, it’s impossible to predict the future. Instead, equities and other fixed income investments have offered a number of advantages. Macroeconomic factors, such as falling interest rates and the supply of capital, have only highlighted this trend.

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Markets in a Minute

U.S. Elections: Charting Patterns in Market Volatility

How have U.S. elections historically impacted market volatility? With elections nearing, we look at over 90 years of market data.

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This Markets in a Minute Chart is available as a poster.

U.S. Elections: Charting Patterns in Market Volatility

Do elections influence market volatility?

Over 90 years of data shows that volatility jumps 30% in the five months leading up to an election. But while elections have historically stoked uncertainty in the market, in reality, the scale of their impact plays a relatively minor role.

This Markets in a Minute chart from New York Life Investments shows volatility trends surrounding elections over the last century, and how investors can best position themselves amid market turbulence.

Making Sense of Market Volatility

Volatility is when a security has sharp price movements in either direction. The market’s volatility is measured by the CBOE Volatility Index (VIX), also known as the ‘fear gauge’ for the market. The higher the VIX reading, the higher the volatility.

The five-year average VIX value is 15.8, with an an all-time low of 9.1 in November 2017, and reaching an all-time high of 82.7 in March 2020. Specifically, in the five months ahead of U.S. elections, the VIX tends to fall between 14 and 18.

MonthAverage Monthly VIX During U.S. Election Years Since 1928
July14.2
August15.0
September16.0
October17.4
November18.0
December14.7

Source: Eureka Report

After the dust settles from elections, market volatility reduces as investors gain more clarity on government direction.

In short, in the six months following an election, volatility tends to fall on a downward sloping trajectory.

Finding Opportunity Surrounding U.S. Elections

With volatility here to stay, investors can utilize a number of portfolio strategies prior to elections.

  1. Stay the course: The easiest thing investors can do is nothing. Ignoring irrational market activity and staying invested will help you keep your investment goals on track.
  2. Focus on value: Investors can focus on companies with sound balance sheets that return value back to shareholders, such as fixed-income investments or dividend-paying stocks. For instance, when concerns circled around increased taxes on investment income in 2012, no less than 1,100 companies issued a special dividend following the election.
  3. Bargain hunt: Overvalued stocks, or sectors in the policy spotlight, can temporarily dip amid market fear. For example, in 2016 the health care sector saw new policies that investors feared would have damaging effects. Ultimately, these concerns were overdone, and the sector rallied after the election.

Focusing on solid company fundamentals can offer windows of opportunity to investors who look past the short-term volatility.

Long-Term Areas to Focus On

Investors can look to structural factors, such as the economic environment, that have a more powerful impact on financial markets.

Interest rates, low bond yields and policy measures, among others, have a greater influence on market performance. Rather than paying attention to short-term volatility, investors can also focus on policy changes that have a lasting impact on the economy:

  1. Employment: Economic policies that help to promote workforce outcomes will have positive impacts on earnings growth, market performance, and investor portfolios.
  2. Taxes: Tax policies reallocate capital. Corporate tax cuts, for instance, can buoy markets and investor optimism.
  3. COVID-19 containment: The policies in place in response to COVID-19, such as the CARES Act, will have a marked impact on investor sentiment, company earnings, and ultimately economic resilience.

Looking past the election, and keeping an eye on policy shifts, could provide more insight into key forces shaping the future of the economy.

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