View from the Observation Deck  

In our last blog post (click here for "S&P 500 Index Geographic Revenue"), we provided a geographic breakdown of the revenue streams of the S&P 500 Index (“Index”). While a myriad of factors affect market performance and returns, we were curious as to what the data would reveal if we sorted the Index by sector. The chart above shows just that, with each sector ranked by its percentage of revenue generated outside of North America.

Information Technology, Materials, Communication Services, Energy, and Industrials have the highest exposure to revenue from outside of North America.

Of all the sectors in the Index, Energy (+22.7%), Materials (+16.3%), and Industrials (+14.3%) have the highest total returns year-to-date (YTD) through 2/20. They also happen to generate a sizeable portion of their revenue from overseas (see chart). Communication Services and Information Technology companies have not fared as well this year, shedding 0.14% and 3.42% (total returns), respectively, through 2/20.

Total returns for each of the Index’s eleven sectors are positive over the trailing 12 months ended 2/20/26.

The three top performing sectors and their total returns over the period are as follows: Industrials (30.3%); Communication Services (24.9%); and Energy (23.4%). The three worst performing sectors and their total returns were: Real Estate (6.9%); Financials (3.5%); and Consumer Discretionary (3.2%). For comparison, the Index posted a total return of 14.4% over the period. 

Takeaway: Market breadth has improved this year, with a greater share of the Index’s constituents outperforming the Index itself through 2/20/26 than over the same period in 2025. Companies generating significant overseas revenues are among the top performers (Energy, Materials, and Industrials). Two notable outliers are the Communication Services and Information Technology Indices. Despite generating a significant share of their revenue from overseas, these two sectors shed -0.14% and -3.42% (total returns) YTD through 2/20. As we noted in a recent discussion (S&P 500 Index Sector Prices vs. All-Time Highs), we appear to be in the early stages of a broad rotation. Technology stocks, which have been the second-best performing sector for the past two years, remain below their all-time high from October 2025. By contrast, Materials, Communication Services, Energy, Industrials, Utilities, and Staples each set their all-time highs in February 2026. While we cannot know what the future holds, we expect overseas revenue streams to have a positive impact on the near-term performance of U.S. companies.

This chart is for illustrative purposes only and not indicative of any actual investment. Investors cannot invest directly in an index. The S&P 500 Index is an unmanaged index of 500 companies used to measure large-cap U.S. stock market performance, while the S&P sector indices are capitalization-weighted and comprised of S&P 500 constituents representing a specific sector.

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