As volatility declined,
all 11 S&P 500 sectors advanced for the month

Over every single time period, sector performance will be driven largely by factors one would expect, such as the overall state of the economy, underlying corporate earnings, current and predicted interest rates, and inflation, among other factors.

Reviewing the sector performance for the month of November (a very short time-period), two things become very clear:

  • First, sectors do not move in lock-step with one another and will often provide very divergent returns for investors – depending on timing and the current economic climate and
  • Second, November continued to see very real divergence in sector performance, with the spread between the best (+10%) and the worst (+0.11%) being unusually wide.

Sector Highlights Through November 2022

For the month of November, sector performance was excellent, as all 11 sectors advanced healthily. For the month of October, sector performance was very good, as 9 of the 11 sectors were up for the month, with 7 up more than 5%.

It is also interesting to see the difference 11 months can make, as investors were reeling in January when 10 of the 11 sectors were red (with only Energy gaining that month); March saw 10 of the 11 positive; April and May saw a mixed bag; June was all negative; July was overwhelmingly positive; August was mostly negative, September was all negative; October was almost all positive; and November was all positive. That’s volatility.

Here are the sector returns for the month of November and October (two very short time-periods):

S&P 500 SectorOct. 2022Nov. 2022
Information Technology+5.66%+4.42%
Health Care+8.05%+4.58%
Real Estate+2.92%+6.52%
Consumer Staples+6.89%+5.54%
Consumer Discretionary-1.64%+0.11%
Communication Services-1.75%+5.05%

Source: FMR

What Does It Mean for Investors?

At a very basic level, the differences in returns for the 11 S&P 500 sectors support two fundamental principles of financial planning – asset allocation and diversification.

At your next portfolio review, let’s revisit the differences between asset allocation and diversification. And we can discuss how to ensure that your portfolio is consistent with your risk profile and personal goals.