There are four trading sessions left in 2015, and it’s still an open question whether the major indexes will close out the year higher or lower. That pretty much tells you everything you need to know about the U.S. equity market in 2015.
The S&P 500 was up just 0.1% for the year heading into Monday’s session; the Dow Jones Industrial Average was down 1.5%. Those numbers don’t reflect total returns, of course, and after accounting for dividends, the S&P is up about 2% on the year.
U.S. stocks are in the red Monday morning, dumping the S&P back into negative territory on the year and pushing the DJIA further in that direction. The S&P is down 16 points, or 0.8%, at 2045, and the Dow is down 103 points, or 0.6%, at 17449. Without any data of note, it appears the skeleton crews manning the trading desks are following oil. Nymex crude is down 3.4% at $36.81.
No single sector has contributed more to the equities market’s miasma than energy. That sector was down about 22% on the year, by far the worst among the six sectors in the red on the year. Materials are down about 9%, and utilities 8%. Four sectors are higher on the year: consumer discretionary (8.8%), healthcare (5.9%), tech (5.1%), and consumer staples (4.5%). Excluding energy, the S&P 500 would be up 2.1% heading into Monday’s session, according to data from S&P Dow Jones Indices.
Within energy, Chesapeake Energy Corp.CHK -8.54% had the widest losses, down about 79% year-to-date. Consol Energy Inc.CNX -9.02% and Southwestern Energy Co.SWN +2.09% were also both down more than 70%. Only six names in the sector are up on the year, with Valero Energy Corp.VLO -1.82% the big winner, up 43%. Tesoro Corp.TSO -1.96% (39%), Cameron International Corp.CAM -0.13% (27%), and Newfield Exploration Co.NFX -2.27% (17%), Phillips 66 PSX -2.25% (14%) and Marathon Petroleum Corp.MPC -1.98% (15%) were the other fortunate gainers.
But the energy patch wasn’t the only drag on the index. Excluding Apple Inc.AAPL -1.12%, the S&P 500 would be up 0.17% on the year. That isn’t a huge difference, but we are talking about a single stock, and a single stock that has for several years been one of the stock market’s main earners. Apple was down about 2% on the year heading into Monday’s trading. The stock peaked in February at $133, and bounced around there through July, but it’s been on a downswing since then.
It may seem easy enough to try to “pro forma” the market’s returns in your mind, to exclude energy and Apple and paint a sunny picture for yourself. But these are not incidental contributors. Apple and the energy sector have been major contributors to the S&P’s 205% gain since the 2009 nadir. Apple was trading at a split-adjusted $12 back in March of 2009. The energy sector rose 124% from March 2009 to its high last summer. Back in 2009, energy had the heaviest weighting of the ten sectors. Apple has been the single biggest contributor to S&P 500 earnings, and is the index’s single-biggest stock by market weighting.
Apple’s stock aside, it’s been a better year to be investing in the big guys. While the S&P 500 clings to its gains, midcap stocks are down 2.5% on the year, and smallcap stocks are down 1.7%.