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Financial Stocks and Market Impact

I have had several questions in the past few weeks about why I have focused on financial stocks and the XLF financial fund lately. Financial stocks represent 18% of the S&P 500 Index. At 18%, financials stocks are the largest group or sector within the S&P 500. This large representation means that financials stocks are responsible for more of price movement of the S&P 500 than other sectors of the market. The chart below shows how the financial sector stock price movement correlated strongly with the S&P 500 until mid '07. At that point the financial stocks began to underperform and drag the S&P 500 down as well.

FinancialsVs.SP500.png 

 

Posted on Tuesday, March 25, 2008 at 01:50PM by Registered CommenterMichael in | CommentsPost a Comment

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