S&P 500 industrial stocks at 1-year low

Industrial companies were leaders among U.S. stocks as recently as four months ago. Now they are laggards -- and the shares “remain vulnerable,” Jonathan Krinsky, chief market technician at Bay Crest Partners, wrote in a report Friday. The ratio between the S&P 500 Industrials Index and the S&P 500 shows the reversal. After setting an almost 20-year low in May 2020, the ratio climbed as much as 21% in the next 12 months. The indicator then gave back 58% of the gain through Friday and finished the week at its lowest level in more than a year.

 

Industrial sector stocks shrinking within S&P 500

Industrial companies don’t mean all that much to the S&P 500 Index these days. They accounted for just 7.8% of the S&P 500’s value as of Thursday, according to data compiled by Bloomberg. That’s a percentage point less than their low in June 2000. The group’s weight has been below the earlier reading since March 5. “The sector is shrinking and diversifying by the day,” Strategas Research Partners LLC wrote Thursday in a Twitter post that tracked the group’s most heavily weighted company. Boeing Co., Honeywell International Inc. and Union Pacific Co. have shared the top rank since the start of March.

U.S. industrial stocks go `from hero to zero'

Shares of U.S. industrial companies signaled caution about the outlook for global trade and economic growth by going “from hero to zero,” according to Nicholas Colas, co-founder of DataTrek Research LLC. Colas cited the S&P 500 Industrials Index’s performance in a report Wednesday. The index ended the day with this year’s sharpest gain, 16 percent, among the 11 main industry groups in the S&P 500 -- and also the steepest drop in the past five trading days, 2.3 percent. “Given that U.S.-China trade talks are entering some sort of home stretch, that’s not what you want to see,” Colas wrote.