Market Commentary - July 2022

Market Commentary - July 2022

| August 05, 2022

S&P 500 Sector Performance for July 2022

As volatility decreased, 10 of the 11 sectors advanced significantly in July

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 July (a very short time-period), two things become very clear:

  • First, sectors do not move in lockstep with one another and will often provide very divergent returns for investors – depending on timing and the current economic climate and
  • Second, July continued to see very real divergence in sector performance, with the spread between the best (+7%) and the worst (-1%) being unusually wide.

Sector Highlights Through July 2022

For the month of July, sector performance was very good, as 10 of the 11 sectors advanced for the month, with only Communication Services (-1.38%) retreating. Contrast that with the month of June, which saw all 11 retreat for the month.

And while seven months is not very helpful when trying to draw conclusions, it is interesting to see the difference a few months can make, as January saw 10 of the 11 sectors red (with only Energy green); March saw 10 of 11 positive; April and May saw a mixed bag; June was all down and July was all up.

In addition, the range in sector-returns was wide, with the Consumer Discretionary and Information Technology sectors both up more than 7% and the Communication Services sector losing more than 1%.

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

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.

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