Stock Stock Stock

Stock market turmoil reveals massive differences in industry performances

Equities 5 minutes to read
Søren Otto Simonsen

Senior Investment Editor

Summary:  The S&P 500 and Nasdaq indices are down with double digits for the year. Breaking them down reveals that there are industries and companies that perform very poorly, but also some that are surging. This points to two things - the strength of diversification and for the risk takers that there are returns to be found in the markets even though they are very sour at the moment.


Let’s be honest, 2022 has been a terrible time to invest. We’ve seen major stocks indices like the S&P 500 and Nasdaq tumble, and they are both with double digits for the year. Last Thursday we saw the Nasdaq take a massive hit as it tumbled over five percent. Falls like these can lead to the simple conclusion that everything is down, which to a certain extent is the truth. Because the beauty of working with data is that you can usually translate it to fit your narrative.

So, when you take a look at the two indices and compare their current price to its highest price within the past year (52 weeks specifically) only one company, Cerner Corporation (the American supplier of health information technology services, devices, and hardware) has a higher price now than at a previous time in the period.



However, if you look at the indices’ performance in 2022, then you can see that there’s a big difference between how industries and companies have performed.

If you focus on the S&P 500 on a sector level (all companies being equally weighted) you see that energy is up 47%, and thus is keeping the index afloat. This sector benefits from the surging energy and fuel prices with a company like Occidental Petroleum being up more than 100%.

On the other side of the spectrum the Consumer Discretionary has lost almost a fifth of its value as has Information Technology. Both areas are being heavily impacted by the increasing challenges with supply chains while the car industry specifically is being halted by the semiconductor shortage as well.

The worst performing stock is Netflix, which is dragging both indices down, as it lost almost 70% of its value since the beginning of the year.

So what?

While this may seem like data gibberish, there are at least two conclusions that can be drawn from this. The first – and most important – is that while the indices are down, they are perfect examples of the strength of diversification. Because investors who haven’t diversified (e.g. put all their money into a stock like Netflix) are so much worse off than an investor who has invested broadly in either of the indices. When you diversify your investments, chances are that something performs well, even when your darlings disappoint.

The second conclusion should be taken with a grain of salt and should not be seen as a suggestion to go wild in the markets. But, for the risk takers, there are companies out there which can give you a profit – especially in the commodities sphere.
No matter whether you want to go hunt for profit or diversify your portfolio, risk management is key to make sure you can execute your strategy comfortably and efficiently. To do so, take a look at 
this article, where investor trainer, Peter Siks, gives you seven ways to protect against market turmoil.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank (Schweiz) AG
Beethovenstrasse 33
CH-8002
Zurich
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.