We’re officially halfway through 2021, which has been very positive for stock market returns. The chart below shows the path of the S&P 500 over the last six months.
Despite a few mild pullbacks, the market has remained strong; currently sitting at an all-time high. 10 of the 11 sectors posted positive performance for the second quarter:
“Market breadth” is the number of stocks participating in market movements. For 2021 so far, because all sectors are higher for the year, the market is exhibiting strong breadth. Many stocks are taking part in this year’s rally. In fact, some of the lowest weights in the S&P 500 such as energy and real estate are outperforming the index as a whole. Meanwhile, technology and healthcare, which make up about 40% of the index, are trailing.
It’s also interesting to note that many of the leading sectors in the chart above show cyclicality with the economy. This means that they tend to lead during economic expansions and lag during contractions. Specifically with regard to our current economic cycle: last year’s slow, COVID-related economy favored technology and health care instead of energy, real estate, and industrials. This year, sector performance has rotated as investors adjust to the end of the pandemic.
Every market — up, down, or sideways — presents challenges and opportunities for investors. When stocks are performing well and bonds are stagnant, it’s as important as ever to maintain a properly-balanced portfolio, designed to meet your financial objectives.
If you would like to discuss your personal portfolio — give us a call. And enjoy the summer!
