The S&P 500 is on track for its best quarter since 1998, but despite the dramatic rebound, many sectors are still struggling to find steady footing.
The index’s consumer discretionary and energy segments are both on pace for their best quarterly performances on record, according to Dow Jones Market Data. Records for both date to the fourth quarter of 1989.
Both groups have surged at least 26% quarter-to-date. Energy stocks have rebounded after a punishing selloff to start the year, while leisure businesses and retailers are buoying the discretionary group. The latter has also been lifted by Amazon.com Inc., which has jumped 40% this quarter.
Their strong performance contrasts with the trajectory of the utilities and real-estate sectors, which are hovering just above correction territory—marked by a 10% drop from their recent highs. The groups, which are up 1.9% and 9.6% this quarter, respectively, have been particularly battered by the coronavirus, due to dwindling demand for office space and a drop in energy use.
The S&P, meanwhile, is up 18% this quarter, cutting its losses for the year to 5.6%. The first quarter’s selloff was the index’s worst performance since the fourth quarter of 2008.
An Amazon driver loads Whole Foods Market groceries into a vehicle. Amazon.com shares have jumped 40% this quarter.
Photo: michael reynolds/epa/Shutterstock“It’s a difficult environment for investors who are trying to make sense” of various signals, said Jeffrey Kleintop, chief global investment strategist at Charles Schwab & Co., who noted that the market currently faces several contradictions.
In the energy sector specifically, he said, “It’s the worst performer for the year, one of the best for the quarter but one of the worst for the last two or three weeks. It shows how choppy and difficult it can be to find the trends in the market.”
Despite the energy sector’s gains this quarter, the stocks have pulled back from their highs earlier this month and are hovering on the cusp of a bear market—marked by a 20% fall from a recent peak. Oil prices have also retreated, and rising concerns surrounding an uptick in coronavirus infections threaten to potentially dent fuel demand again.
The simultaneous—and seemingly conflicting—milestones within the energy sector highlight just how quickly this year’s stock market can change. Such volatility across the market has made it difficult for investors to try to predict where stocks are headed next.
Despite signs that the breadth of the market’s rally was widening earlier this month, investors have been more concerned lately about signs of a rise in coronavirus cases. On Wednesday, major indexes fell, as pockets of infections intensified fears that lockdowns would be reinstated.
Some of the biggest winners for the quarter in the S&P 500 have been energy stocks, with Apache Corp. surging 213% since March 31 and Marathon Oil Corp. climbing 76%—a trend that analysts say could have been driven earlier this quarter by bargain hunting for discounted shares, as well as short sellers rushing to cover their bets.
But there have been other pockets of outperformance, too: PayPal Holdings Inc. is among the best performers in the S&P 500 for the quarter, gaining 75%. Meanwhile, Dish Network Corp. has grown 72%, CarMax Inc. has risen 66% and eBay Inc. has jumped 62%.
Some of the biggest winners for the quarter in the S&P 500 have been energy stocks.
Photo: jennifer hiller/ReutersThe S&P 500’s worst performers include Xerox Holdings Corp., Cincinnati Financial Corp., General Electric Co. and Coty Inc., all of which are down 16% or more quarter-to-date.
A resurgence in cyclical stocks helped drive markets higher in late May and early June, but after the S&P 500 hit a recent peak on June 8, the market has been far more choppy and many economically sensitive stocks have fallen. Large-cap technology stocks have continued to be steady performers in the weeks since, helping to lead strong performances in some of the sectors in which they are included.
The communications services sector, for example, which includes Facebook Inc. and Google parent Alphabet Inc. is up 20% for the quarter, on track for its best performance since the fourth quarter of 2002. And the information technology sector, meanwhile, has gained 27%, on course for its best performance since late 2001.
Write to Caitlin McCabe at caitlin.mccabe@wsj.com
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