Market Commentary - March 2022

Market Commentary - March 2022

| April 01, 2022

Very Good Sector Performance for March 2022

10 of the 11 S&P 500 sectors were positive and half were up more than 5%

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 March (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, March continued to see very real divergence in sector performance, with the spread between the best (+10%) and the worst (-0.35%) being quite wide.

Sector Highlights Through March 2022

For the month of March, sector performance was very good, as 10 of the 11 S&P 500 sectors were green, with half of those jumping more than 5%.

And while three months is not very helpful when trying to draw conclusions, it is interesting to see the difference a couple of months can make, as investors were reeling in January when 10 of the 11 sectors were red (with only Energy gaining that month) and this month it was only the Financials sector that retreated – and it was just barely down for the month.

In addition, for March the range in sector-returns was very wide, with the Utilities sector gaining over 10% and the Financials sector losing 0.35%.

Here are the sector returns for the month of March and February (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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