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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

Identifying Trends With the Relative Strength Index

When is the S&P 500 Index considered overbought or oversold? The relative strength index may offer some answers to identifying market trends.

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Identifying Market Trends: The Relative Strength Index

What happens when the S&P 500 Index enters oversold territory? Does the market reverse, or continue on this trend?

A widely-used momentum indicator, the relative strength index (RSI) may offer some insight. The RSI is an indicator that may show when a stock or index is overbought or oversold during a specific period of time, indicating a potential buying opportunity.

This Markets in a Minute from New York Life Investments looks at the RSI of the S&P 500 Index over the last three decades to show how the market performed after different periods of overbought or oversold conditions

What is the Relative Strength Index?

The RSI measures the scale of price movements of a stock or index. In short, the RSI is used to calculate the average gains of a stock divided by the average losses over a certain time period. These are then tracked across a scale of 0 to 100. Broadly speaking, a stock is considered overbought if it reads 70 or above and it is considered oversold if it is 30 or below.

For example, when the S&P 500 Index has a RSI of 85, an investor may consider it overbought and sell their shares. Conversely, if the RSI hits 25, an investor may buy the S&P 500 thinking the market will bounce back.

The RSI is often used with other indicators to identify market trends.

The Relative Strength Index and S&P 500 Returns

Below, we show the 12-month returns of the S&P 500 Index after key ‘overbought’ or ‘oversold’ conditions in the market as indicated by the RSI:

DateRSIShiller PE Ratio*S&P 500 Index 12-Month Return
Jul 15 200220239.4%
Dec 4 200673274.5%
Oct 13 200815167.3%
Feb 7 201175231.9%
May 13 2013752316.1%
Jan 8 20188933-7.2%
Mar 16 2020222566.3%
May 3 202172370.0%

*Measured by the average inflation-adjusted earnings of the S&P over 10 years

As the above table shows, following each period of extremely oversold territory in the RSI, the S&P 500 Index had positive returns.

In fact, the S&P 500 Index had the strongest one-year returns following the COVID-19 crisis of March 2020, with over 66% 12-month returns. During the time of extreme fear, the RSI sank to deeply oversold territory before sharply rebounding.

Interestingly, following periods of extremely overbought conditions in the market there was a range of positive and negative performance. Most recently, before the peak of the last cycle in 2021, the S&P 500 Index spent roughly 9 months in ‘overbought’ territory before declining into 2022.

The Relative Strength Index in 2022

With the economy in uncertain territory, how does the RSI look today?

In early June, following a bleak consumer sentiment announcement, the RSI fell to 30, hovering on oversold territory. Since then, it has risen closer to 40 as consumer sentiment and perspectives on economic conditions have slightly improved.

However, whether or not the RSI will continue on this uptrend remains to be seen.

For the remainder of 2022, market sentiment, which may be shaped by the coming GDP and inflation figures, could push RSI into oversold territory once again. As a bright spot this may be good news—reinforcing a turning point in the market.

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Markets in a Minute

Visualized: How Bonds Help Reduce Bear Market Risk

How have bonds historically performed during a bear market? How have different stock and bond allocations performed?

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Bear Market Risk

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Visualized: How Bonds Help Reduce Bear Market Risk

Which tactics can investors use to reduce portfolio downside risk?

One time-tested method is allocating to bonds. Bonds have sheltered portfolio losses during bear markets thanks to the lower risk profile of bonds compared to stocks. Often, when stocks declined during market selloffs, safer assets like bonds tended to increase as the demand for stability grew.

This Markets in a Minute from New York Life Investments shows the performance of bonds and stocks during bear markets since World War II.

Bond Performance During Bear Markets

Bear markets are defined as a 20% or more decline in U.S. large cap stocks from peak to trough. Since World War II, bear markets have occurred less frequently than bull markets, with the U.S. stock market spending 29% in a bear market versus 71% in a bull market.

With this in mind, we show how a spectrum of portfolio asset allocations to stocks and bonds have performed over the last several bear markets.

  • Stocks: represented by U.S. large cap stocks
  • Bonds: represented by U.S. intermediate government bonds, which are issued with maturity dates between two and five years
Allocation (Stock / Bond)Average DrawdownAverage Time Until Recovery*
100% / 0%-34%3.3 years
90% / 10%-31%3.2 years
80% / 20%-28%2.9 years
70% / 30%-24%2.8 years
60% / 40%-20%2.5 years
50% / 50%-16%2.1 years
40% / 60%-11%1.2 years
30% / 70%-7%0.8 years
20% / 80%-4%0.8 years
10% / 90%-2%0.5 years
0% / 100%-1%0.2 years

*Length of time until new all-time high

For a 100% stock portfolio, the average drawdown was -34%, with 3.3 years until recovery—the time it took to reach a new all-time high.

Comparatively, a portfolio entirely made up of bonds fell -1% on average during bear markets with a recovery time of just a few months.

Balanced Portfolios in Bear Markets

Looking closer, we show how adding bonds to a portfolio has cushioned portfolio losses over the following market downturns, sometimes by as much as 20 percentage points.

Bear Market100% Stock Portfolio Max Drawdown60/40 Portfolio Max Drawdown
2020-20%-10%
2008-51%-30%
2001-45%-22%
1988-30%-17%
1973-43%-26%
1969-29%-18%
1962-22%-13%
1947-22%-13%

A balanced 60/40 portfolio had a 20% average drawdown, recovering in 2.5 years. During the 2020 COVID-19 crash, for instance, a 60/40 portfolio fell almost 10% and fully recovered in six months. By contrast, a 100% stock portfolio declined nearly 20%.

In all of the above historical downturns, investors with a diversified portfolio have been better positioned in a bear market.

Building Portfolio Strength

Bonds have historically seen less volatility than stocks during tougher financial conditions. Typically, riskier assets like stocks have been more prone to market fluctuations than bonds.

To prepare for a bear market, investors can structure a portfolio that aligns with their risk tolerance. Over the long run, the diversification benefits of bonds have been fundamental to protecting portfolios and lowering risk.

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