XLE and XLRE Lead Losses with -5.69% and -4.76% as of December 20, 2024

Year-to-Date Performance: All Sector ETFs Show Positive Returns, Led by the SPY outperformers: XLC (+35.9%), XLF (+30.5%), and XLY (+28.8%)

As of the week ending 20 December 2024, all eleven sector ETFs experienced declines, reflecting a broad market downturn. Among the sectors, XLE (Energy) faced the most significant loss, followed by XLRE (Real Estate), with other notable losses in XLB (Materials) and XLC (Communication Services). While the broader market, represented by SPY (S&P 500), also saw a downturn, some sectors, like XLK (Technology) and XLU (Utilities), fared relatively better with more minor losses. Despite the overall decline, year-to-date returns remain positive across all sectors, with XLC (Communication Services), XLF (Financials), and XLY (Consumer Discretionary) leading with firm performance.

The relative strength scores (RSS) as of 20 December 2024 show varied momentum trends compared to the S&P 500 (SPY). Sectors like XLC (Communication Services) and XLY (Consumer Discretionary) exhibited strong momentum, achieving significant gains in their RSS scores. Conversely, XLV (Health Care) and XLU (Utilities) saw substantial declines, reflecting weakening performance compared to the broader market. Additional shifts in XLE (Energy) and XLI (Industrials) indicated minimal or negative momentum, pointing to challenges for these sectors. Correlations further highlight the dynamics of sector rotation, with notable alignments between XLP (Consumer Staples) and XLV (Health Care), as well as significant divergences with XLC (Communication Services). These insights provide valuable context for sectoral trends and potential diversification strategies.

Now, let’s take a closer look at the performances of eleven sectoral ETFs and their top holdings. Enjoy the insights!

Weekly Returns

As of the week ending 20 December 2024, all eleven sector ETFs experienced declines, reflecting a broad market downturn. XLK fell by -1.29%, and XLU declined by -1.56%, showing relatively more minor losses than the broader SPY, down -1.83%. XLF dropped by -2.08%, closely followed by XLV with a -2.12% decline. XLP and XLI lost -2.56% and -2.63%, respectively, while XLY fell by -2.79%. XLC declined by -2.95%, and XLB posted a steeper loss of -4.09%. XLRE experienced a sharp drop of -4.76%, while XLE faced the most extensive loss among the sectors, tumbling by -5.69%.

Year-to-Date Performances

Year-to-date returns as of 20 December 2024 show positive performance across all eleven sector ETFs. XLC led with a robust return of +35.95%, followed by XLF at +30.49% and XLY at +28.84%. The broader market, represented by SPY, posted a solid return of +25.97%, while XLU and XLK gained +23.49% and +23.23%, respectively. XLI delivered +18.55%, and XLP achieved +13.24%. Smaller gains were seen in XLRE with +4.28%, XLE at +2.82%, and XLV at +2.33%. XLB rounded out the group with a modest return of +1.33%. Despite a challenging week, year-to-date results reflect a strong overall market performance, with XLC, XLF, and XLY standing out as top performers.

Sectoral ETF Cycles

As of 20 December 2024, sector ETFs' relative strength scores (RSS) show varying momentum trends compared to the S&P 500 (SPY). XLC and XLY displayed strong momentum, with XLC increasing from 0.62 to 0.71 and XLY rising from 0.69 to 1.00, reflecting substantial weekly gains in their RSS of 7% and 18%, respectively. XLP and XLV showed weaker trends, with their RSS scores declining, particularly in XLV, which dropped from -0.82 to -1.00, reflecting significant losses in relative strength. XLU experienced a major decline in its RSS from 0.17 to 0.07, reflecting a 42% decrease over the week, signaling a sharp weakening trend.

XLK, despite a slight increase in its RSS, remained negative at -0.72, showing that it is still lagging behind the broader market. Sectors like XLE and XLI experienced minimal or negative momentum shifts, with XLE dropping by 2% and XLI showing a 37% decline in RSS. Conversely, XLF and XLB exhibited small positive changes, although XLB still had a relatively low RSS score of -1.00, indicating poor performance. Overall, momentum remains strongest in XLY and XLC, while sectors like XLV, XLU, and XLB are underperforming.

The correlations show that XLP and XLV are strongly aligned (0.91), moving in the same direction, while XLC is negatively correlated with both (-0.89 and -0.88), meaning it tends to underperform when they do well. XLF and XLI have a positive correlation (0.57), indicating similar performance trends. XLE aligns strongly with XLP (0.79) and XLV (0.85), while XLB is positively correlated with XLF (0.60) and XLI (0.75). These correlations suggest sector rotation dynamics and opportunities for diversification.

Communication Services Sector ETF (XLC)

For the week ending 20 December 2024, the performance of top communication sector stocks and ETFs varied significantly. GOOGL and GOOG posted slight gains of +0.84% and +0.83%, respectively, standing out in an otherwise weak week for the sector. On the downside, NFLX fell by -1.07%, while the broader XLC ETF declined by -2.95%. Telecommunications giants T and CMCSA dropped by -3.72% and -4.26%, respectively. TMUS experienced a notable loss of -5.01%, and VZ tumbled by -5.56%. Meanwhile, META saw a sharp decline of -5.58%, and CHTR led the losses, plummeting by -7.45%. Despite slight gains for GOOGL and GOOG, the communication sector broadly struggled during the week.

Technology Sector ETF (XLK)

The technology sector saw mixed performance for the week ending 20 December 2024, with a few stocks managing gains amid broader declines. AAPL led the sector with a strong return of +2.56%, followed by ACN at +2.14%, while NVDA edged up slightly by +0.34%. On the downside, CSCO was nearly flat, with a modest loss of -0.17%, while the broader XLK ETF fell by -1.29%. More significant declines were seen in AVGO at -1.78%, ORCL at -2.15%, and MSFT at -2.39%. CRM dropped by -2.90%, and ADBE slid by -3.98%. The steepest loss came from AMD, which plummeted by -6.07%. Despite positive contributions from AAPL and ACN, the technology sector struggled overall, with notable declines among semiconductor and software companies.

Consumer Discretionary Sector ETF (XLY)

For the week ending 20 December 2024, the consumer discretionary sector faced significant challenges, with most stocks experiencing declines. NKE posted a relatively modest loss of -0.40%, while AMZN and MCD were down -1.12% and -1.32%, respectively. TJX declined by -2.28%, and the broader XLY ETF fell by -2.79%. More significant losses were seen in BKNG and TSLA, which dropped by -3.42% and -3.48%, respectively, and ORLY, which slid by -4.05%. Among retail-focused stocks, LOW fell by -5.59%, and HD posted a steeper decline of -5.85%. SBUX experienced the most significant drop in the sector, tumbling by -9.70%. The week highlighted a broad downturn in consumer discretionary, with sharp losses in retail and automotive-related stocks.

Consumer Staples Sector ETF (XLP)

The consumer staples sector saw widespread declines for the week ending 20 December 2024. KO registered the most negligible loss at -0.90%, followed by CL with a drop of -1.51%. PG and PM fell by -1.75% and -1.90%, respectively, while MO dropped by -1.97%. Among retail giants, WMT and TGT recorded losses of -2.13% and -2.26%, respectively, as the broader XLP ETF declined by -2.56%. More considerable losses were observed in PEP at -3.28%, COST at -3.57%, and MDLZ, leading to declines at -4.10%. The week's performance underscored a challenging environment for consumer staples, with even defensive names under pressure.

Health Care Sector ETF (XLV)

For the week ending 20 December 2024, the healthcare sector experienced mixed performance, with a few stocks managing gains amid broader declines. PFE led the sector with a strong return of +3.05%, followed by ABBV and ABT, which gained +1.27% and +0.75%, respectively. On the downside, TMO posted a slight loss of -0.54%, and JNJ fell by -1.47%. The broader XLV ETF declined by -2.12%, reflecting overall sector weakness. More considerable losses were observed in AMGN at -2.68%, DHR at -2.70%, and LLY at -2.71%. MRK dropped by -3.10%, while UNH experienced the steepest decline, tumbling -3.91%. Despite gains from PFE, ABBV, and ABT, the sector faced significant pressure overall.

Utilities Sector ETF (XLU)

The utilities sector had a mixed performance for the week ending 20 December 2024, with a few modest gains overshadowed by significant losses. EXC led with a slight return of +0.41%, followed by PCG, which gained +0.35%, and AEP, which was nearly flat at +0.04%. Losses began with SO and DUK, which declined by -0.41% and -0.50%, respectively. D fell by -0.70%, while XEL saw a more significant drop of -1.06%. The broader XLU ETF was down -1.56%, reflecting the sector's overall weakness. Considerable losses were observed in SRE and NEE, which fell by approximately -2.64%. The steepest decline came from CEG, which tumbled by -5.04%. Despite minor gains for EXC, PCG, and AEP, the utilities sector struggled throughout the week.

Energy Sector ETF (XLE)

The energy sector faced steep declines for the week ending 20 December 2024. WMB experienced the most negligible loss at -1.73%, followed by OKE with a decrease of -3.80%. More significant drops were seen in XOM at -4.48%, while the broader XLE ETF fell -5.69%, mirroring the sector's struggles. COP and EOG dropped by -5.84% and -6.10%, respectively, while CVX fell by -7.16%. Refining and oilfield services stocks saw even steeper losses, with VLO down -8.17%, MPC declining -8.37%, and SLB losing -8.43%. PSX posted the largest decline, tumbling -10.06%. The week highlighted widespread challenges for energy stocks, with no signs of reprieve across the sector.

Real Estate Sector ETF (XLRE)

The real estate sector faced notable losses for the week ending 20 December 2024. WELL and DLR experienced smaller declines of -3.47% and -3.50%, respectively, while EQIX dropped by -3.92%. More significant losses were seen in SPG at -4.45% and O with a decline of -4.61%. The broader XLRE ETF fell by -4.76%, reflecting the sector's overall weakness. CSGP declined by -4.84%, while PLD and PSA posted larger drops of -6.22% and -6.33%, respectively. CCI and AMT saw the steepest losses, falling -6.64% and -6.81%, respectively. The week highlighted significant pressure on real estate stocks, with most companies facing sharp declines.

Financials Sector ETF (XLF)

For the week ending 20 December 2024, the financial sector showed a mix of performance, with some stocks posting slight losses and others more substantial declines. V posted a small gain of +0.94%, while WFC and MA saw minimal losses of -0.14% and -0.18%, respectively. JPM dropped by -0.98%, and BRK-B saw a decline of -1.03%. MMC fell by -1.55%, and the broader XLF ETF lost -2.08%. More significant declines were observed in SPGI at -2.76%, MS at -3.11%, and BAC at -3.28%. GS posted the most extensive loss in the sector, dropping -3.31%. The week highlighted a challenging period for the financial sector, with most stocks in the group experiencing losses.

Industrials Sector ETF (XLI)

The industrial sector saw mixed results for the week ending 20 December 2024, with a few stocks posting gains and others experiencing losses. BA led the sector with a strong return of +4.54%, followed by GE at +1.42%, and HON with a modest gain of +0.31%. On the downside, ADP declined by -0.92%, while RTX and LMT saw more minor losses of -1.08% and -1.14%, respectively. DE dropped by -1.81%, and the broader XLI ETF fell by -2.63%. More considerable losses were observed in UPS at -2.39% and UNP at -3.69%, with CAT seeing the steepest decline of -3.80%. Despite the positive performance from BA, the sector faced pressure overall, with many stocks posting significant losses.

Materials Sector ETF (XLB)

For the week ending 20 December 2024, the materials sector experienced broad declines, with almost all stocks posting losses. DOW saw the most minor loss at -2.25%, followed by LIN at -2.52%. CTVA dropped by -3.38%, and the broader XLB ETF declined by -4.09%. More enormous losses were seen in DD at -4.40%, ECL at -4.51%, and NEM at -4.82%. SHW fell by -5.22%, while APD experienced a steeper decline of -5.54%. FCX and NUE saw the most significant drops in the sector, with losses of -6.56% and -6.92%, respectively. The week highlighted a problematic period for the materials sector, with many companies facing significant losses.

Trading/Investing Ideas Using Fundamental Analysis

Lastly, the table below presents some investing or trading ideas for you.

Data Source: Investing.com | Smart Watchlists as of the week ending 20 December 2024.

Your feedback matters!

Share your thoughts with me, and together, we can shape the next episode of the Sectoral ETFs Cycles Newsletter into more insightful and engaging. I look forward to hearing from you!

Warm regards,

-Cenk

Financial Disclaimer: The information provided is intended solely for general informational purposes and does not constitute financial, investment, or legal advice. It is strongly advised to seek personalized guidance from qualified financial or legal professionals, considering your financial circumstances, investment objectives, and legal considerations. Given the inherent risks associated with financial markets and investment products, investment decisions should be made cautiously, considering your risk tolerance, financial goals, and a thorough evaluation of potential rewards and risks. Additionally, the accuracy and timeliness of the information are not guaranteed, and no warranties or representations are provided. Readers and users are urged to research and consult with experts before making financial or investment choices.