July Performance Numbers Show Changes in Sectors and Foreign Markets

With Monday bringing the month of July to a close, it is worth looking at the performances of foreign and domestic indices as well as the sectors to see if there are any possible shifts going on.

Looking at the domestic indices through the first half of 2017, we see that the Nasdaq Composite gained 14.07 percent and clearly outperformed the S&P 500, Dow Jones Industrial Average and Russell 2000. The S&P gained 8.24 percent, the Dow gained 8.03 percent and the Russell lagged with a gain of only 4.29 percent. July saw the same leader and same laggard with the Nasdaq gaining 3.38 percent and the Russell only gaining 0.69 percent, but the Dow outperformed the S&P during July with a gain of 2.58 percent and it closed the gap with the Nasdaq.

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The fact that the Russell has lagged throughout 2017 could be a sign that investors are shying away from the riskier low-cap arena. The shift in the performance of the Dow also points to investors being attracted to larger cap stocks and a slight shift to less risk.

Looking at the main indices in Asia and Europe, the Hong Kong Hang Seng Index led the indices for the first half of the year with a gain of 17.11 percent. That performance was more than double the second best performing index. The German DAX gained 7.35 percent during the first half of the year and that was good enough for second. The French CAC gained 5.31 percent, the Japanese NIKKEI gained 4.81 percent, the Shanghai Composite gained 2.86 percent and the London FTSE gained 2.38 percent as the biggest laggard in the first half of the year, at least among these six indices.

The tables turned a little in July as the DAX lost 1.68 percent and that was the worst performance of the bunch. The FTSE gained 0.81 percent in July and it was the only one of the three European indices to gain ground during the month. The Hang Seng Index continued to shine with a gain of 6.05 percent and that was tops among the six indices.

Shifting the focus to the ten main sectors here in the United States, during the first half of the year it was the healthcare sector that led the way with a gain of 15.81 percent. This is pretty impressive considering all of the political rhetoric that has been focused on the healthcare industry. The tide did shift a little in July as the sector was the third worst performer during the month.

The tech sector was the leading sector in July with a gain of 4.46 percent and it was the second best performer during the first half of the year. With the outperformance in July, the tech sector has now become the top performing sector for the year through the end of July.

In the first half of the year, the only sector that lost ground was the energy sector with a loss of 12.69 percent. The group managed a turnaround in July and gained 2.62 percent and was the second best performer for the month. Utilities managed to gain 2.42 percent in July and that was good enough for third. It is also worth noting that all ten sectors gained ground in July.

The takeaway from all of this is that investors seem to be more attracted to Asian stocks than they do European stocks and that domestically in the U.S., there may be a shift away from risk. Seeing the Russell lag, the Dow outperform all but the Nasdaq and seeing utilities among the top three sectors all point to that possibility.

About Rick Pendergraft

Rick has been studying, trading, analyzing and writing about the investment markets for over 30 years. He has worked for some of the largest financial publishers in the world and he has been quoted in the Wall Street Journal, USA Today, the New York Times and the Washington Post. In addition, he has been interviewed on Bloomberg, CNBC and Fox Business News. Rick’s analysis process includes fundamental, sentiment and technical analysis. Rick started college as an education major, wanting to teach economics, but eventually changed to majoring in Economics and received a Bachelor of Science in Economics from Wright State University. His desire to inform and educate people is at the heart of his writing.