Staples Surges Toward A New High

Consumer Staples stocks have put together quite a month, and today’s rally has brought a new all-time high within reach. The sector is up more than 2.5% today, its biggest daily gain since July 16th, leaving it just 0.26% below its February 27th record close. After spending much of the spring and summer moving sideways and heading lower in September, the defensive Staples sector has made up a lot of ground in a hurry.

As shown below, this is the sector’s third-best performance through the first 16 trading days of any month since 1990. Only October 1998 (+14.61%) and February 1991 (+11.16%) were stronger than this month's 11.1% gain. That puts this month ahead of some sizable rallies earlier this year, including January’s 6.60% gain and February’s 7.29% advance over the same number of sessions.

The table below shows the 25 strongest starts to a month, including this month, along with the sector’s subsequent returns. After gains this large, the next week has often been less impressive. Across the 24 prior occurrences, Consumer Staples averaged a decline of 0.30% over the following week, with gains less than half the time (45.8%). A strong start hasn’t necessarily meant an immediate reversal, though. One month later, the sector was higher 62.5% of the time, averaging a modest gain of 0.43%. Further out, returns were more consistently positive. Staples gained an average of 5.44% over the next six months and 12.27% over the next year, with positive returns 70.8% and 77.3% of the time, respectively.