The SPX Index (SPX) keeps notching new all-time highs, now boasting a year-over-year gain of more than 30%. This impressive run reflects strong market momentum, but it could make investors nervous about overbought conditions. In this week’s analysis, I’ll explore historical instances when the SPX surged by 30% over a 52-week period. Also, I’ll examine which sectors performed the best and worst over the past year.
What 30% Gains Could Bring
I went back to 1950 and found times the SPX gained 30% or more over the previous 52 weeks and was the first reading in at least 100 trading days. Investors afraid the market could be out of steam can be comforted by the data below. After these huge year-over-year gains, the SPX tends to perform as usual or maybe just a slight underperformance in the short term (out to three months). The six-month returns after 30% gains slightly outperform the typical market returns. A year after these huge runs, the SPX gained on average 11.5%, with 23 of 26 returns being positive. Hopefully, strength continues to beget strength in the longer term.
Best and Worst Performing Sectors
For this section, I grouped about 2,200 optionable stocks into 39 different sectors. I’m ranking the best and worst sectors based on some different criteria.
First, here are the 10 best and worst sectors going by the average stock return over the past 52 weeks. The best sector is Telecom Equipment. The average return is buoyed by three stocks that more than doubled over the past year, including AST SpaceMobile (ASTS) which is up almost 600% year over year.
Automobiles and parts is only one sector in which the stocks have an average negative return. Not even a 30% gain in the market could boost these stocks higher. The big loser in this group was Rivian (RIVN), which has been cut in half over the past year.
Next, I’m ranking sectors by the percentage of stocks from the sector that are positive. Banks stocks have been amazing for this metric, with 183 out of 184 stocks in the sector positive. Only New York Community Bancorp (NYCB) is down from a year ago. Those automobile stocks are again the worst sector as far as this metric goes with just four of 28 stocks positive over the past 52 weeks.
Here’s another way I ranked sectors which give a different list of stocks. These tables show the top 10 sectors by the percentage of stocks that are within 5% of their 52-week high. The boring sectors of utilities, real estate investment trusts (REITs), investment banks, insurance, and precious metals are at the top of the list. The sector with the fewest stocks near their 52-week high is, to no surprise, the automobile sector.
