Energy and Basic Materials, as well as Technology – led by Apple – have been the biggest drag on expected, full-year, 2019 earnings growth for the SP 500.
Energy is the biggest drag, falling from an expected 26% growth rate on October 1 ’18 to today’s 8.5% decline. (clients have not owned any Energy for years, ever since the bounce failed to materialize in the sector following the Q1 ’16 bottom. Energy’s market cap as a percentage of the SP 500 has fallen from 14% – 15% in mid-2014 to just 5% – 6% today. The sector is becoming less important to the benchmark over time, and for good reason.)
Surprisingly, the Financial sector’s expected full-year earnings growth looks surprisingly stable for the calendar year. Clients remain overweight Financials as they did in ’18.
More detail coming over the weekend.
Thanks for reading.