These sector ETFs have been successful during earnings season

ETF investment tools

ETF investment tools

Investing is not a competition, or at least it shouldn’t be. However, earnings season has become much more volatile and unpredictable in terms of how companies’ actual quarterly announcements compare to their stock price reaction.

Therefore, as part of the ongoing monitoring of the market by an advisor or investor, it is worth taking a quarterly look at how it is performing compared to the other 11 sectors from the S&P 500 index.

Although earnings announcements appear almost every trading day, when megabank J.P. Morgan releases its results, it is generally considered to be the beginning of the first part of the earnings monitoring meeting.

The latter occurred on April 12, so I reviewed the returns of each sector spider ETF from that date through Tuesday’s close. Public utility companies were the winners, growing by 8.3%, as indicated by the Central Statistical Office Tools Select Sector SPDR ETF (XLU).

These four words combined into one (“utilities won”) may be new to some investors because it’s been a long time since this small but high-yielding sector of the U.S. stock market led an earnings season in which the stock market didn’t crash.

The SPDR S&P 500 Mutual Fund (SPY) gained 1.2% during this time, a Invesco S&P 500 Equal-Weight ETF (RSP) it increased by 1.6%, so from that point of view it wasn’t a bad period of profits.

Low energy returns for this ETF

Energy sector represented by Energy Select Sector SPDR ETF (XLE), lagged behind and dropped by 3%. This reflects at least moderately positive corporate earnings perceptions this quarter. In total, nine of the 11 sectors achieved positive results, although in many cases the rate of return was low, above zero.

This naturally masks the huge range in how individual stocks reacted to earnings, whether they were 10-20% higher between the close of one night and the open of the next morning, or the same percentage change with a minus sign preceding it. That’s what earnings season has become: a five-week period during which advisors and investors holding individual stocks must put on their hard hats at 4 p.m. (ET), Monday through Thursday.

But that’s why ETFs are so valuable in every investor’s toolkit. They provide diversification, but we can also identify specific investments (unlike mutual funds) every day, so we know what we have and can assess where the opportunities and risks are.

Consumer staples gained 4.6%, taking second place in the sector derby this time. This performance Consumer Staples Select Sector ETF (XLP)coupled with the XLU surge, they are reminiscent of some obscure market periods when such defensive sectors outperformed.

But it’s only been a month and we’re talking about earnings season. Observe, analyze, but don’t overdo it.

There will be another one in July!

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