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S&P’s Sector Leaders and Laggers of 2021

Dec 31, 2021

By:James Blakeway

As every media outlet continues to point out, it’s been a stellar year in the S&P 500. The Index’s greater than 27% return for 2021 continues an epic three-year streak of double-digit gains. The S&P 500 is now up over 80% since the end of 2018, as the market shrugged off the pandemic last year and resumed a seemingly endless rally. 

SPX Return Chart

New all-time highs were reached repeatedly in 2021. This came as a largely vaccinated world faced the Covid Delta variant this summer and now the seemingly milder, albeit more transmissible, Omicron variant, and investors cemented the optimism that we are returning to some sense of normalcy in 2022. 

S&P 500 Annual Returns since 1991

S&P 500 Sector Returns

Interestingly, the individual sectors of the S&P 500 are green across the board to round out the year. We saw the same phenomenon in 2019, with all sectors posting positive results that year. The “worst” performing sector for 2021 was Consumer Staples, which is largely more blue chip, slower growing stocks. However, the gains for the Consumer Staples ETF (XLP) were still 16%. Perhaps unsurprisingly, the best performing sectors for the year were those that saw negative results in 2020. The Energy, Financial, and Real Estate sectors saw strong rebounds after dismal prior year. 

S&P Sector Weighting and Returns

Keep in mind that the S&P 500 index is by no means equally weighted. While not as tech-heavy as the Nasdaq-100, the S&P still sees almost 30% of its portfolio concentrated in technology stocks, a strong driver of growth once again in 2021.

Betting on the rebound of the beaten down sectors of 2020 worked out well for investors, but the picture is far murkier heading into 2022 with all sectors performing well this year. Investors will likely need to be nimble and be mindful of changes in the investing landscape that may be driven by impending action from the Federal Reserve as well as international geopolitics.

S&P Outlook for January 2022

Traders looking for implied volatility and options selling opportunities in these ETFs face slim pickings for the Jan and Feb expiration cycles with low implied volatility ranks in most sectors.

Implied Volatility of S&P Sectors


Healthcare, Consumer Discretionary and Financials stand out with IVR’s over 30. But keep in mind there are some heavy earnings weeks in the early new year with many companies reporting quarterly or annual results.

Time will tell what 2022 holds for the S&P 500 as well as the individual sectors. After an 80% gain in three years, the world is keen to know: Will the rally hold? Or are we due for a slow down?

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