Today marks the midpoint of spring, so from here on, we can say that we’re closer to summer than winter. Summer isn’t typically thought of as a positive time for equities, but as highlighted in the “Seasonality” section of our Morning Lineup today, the next three months, which is the period straddling the back half of spring and the first half of summer, has been relatively strong in the last ten years. The table and charts below summarize the performance of the S&P 500 ETF (SPY) and each sector-tracking ETF from the close on May 5th through August 5th. The S&P 500’s median performance during this period over the last ten years has been a gain of 5% with positive returns 90% of the time. Leading the way higher, Health Care (XLV), Real Estate (XLRE), and Technology (XLK) have all experienced median gains of over 5% with positive returns 85% of the time or more. In addition to XLV and XLK, Consumer Discretionary (XLY) and Consumer Staples (XLP) have also been up during this period in nine of the last ten years. On the downside, the only sector that has had a negative return on a median basis has been Energy (XLE). Ironically, even last year when the sector outperformed the broader market by a significant degree, it not only declined (-8.3%), but it also underperformed the S&P 500 by a wide margin during this three-month stretch.

Looking at the last ten years, in every year since 2013, there have only been two years that the majority of sectors in the S&P 500 declined during this period (XLRE price data doesn’t begin until 2016 while XLC didn’t start trading until June 2018). Last year, six of eleven sectors traded lower even as the S&P 500 had a marginal gain, while in 2019, eight of eleven sectors declined as the S&P 500 fell 3%.

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