Sector Performance Via Market Capitalization (Since Steel/Aluminum Tariffs Enacted)

 
View from the Observation Deck  

  1. On 3/8/18, President Trump signed orders imposing tariffs on imported steel (25%) and aluminum (10%). 
  2. Since 3/8/18, tariff announcements have expanded beyond steel and aluminum, with President Trump targeting China in particular due to the sizable trade deficit between the U.S. and China. That trade deficit rose from $347 billion in 2016 to $375 billion in 2017, according to CNBC. China, the European Union and some other U.S. allies are responding in kind by levying tariffs against U.S. goods. 
  3. While tensions over tariffs have escalated, the hope is that things do not evolve into an all-out trade war. 
  4. As of 6/26/18, the S&P 500, S&P MidCap 400 and S&P SmallCap 600 Indices stood 5.21%, 1.94% and 1.81% below their respective all-time closing highs, according to Bloomberg.  
  5. These three indices together comprise the S&P Composite 1500 Index, which represents approximately 90% of total U.S. equity market capitalization (cap), according to S&P Dow Jones Indices. 
  6. Sector performance can vary widely by market cap. Some of the sectors reflect a fairly significant disparity in performance (see table). 
  7. Based on market cap alone, small-cap stocks, as measured by the S&P SmallCap 600 Index, have significantly outperformed their mid- and large-cap counterparts since the tariffs began (3/8/18). Small-cap stocks tend to have less exposure to global trade policies. 
This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks (currently 505) used to measure large-cap U.S. stock market performance. The S&P MidCap 400 Index is a capitalization-weighted index that tracks the mid-range sector of the U.S. stock market. The S&P SmallCap 600 Index is a capitalization-weighted index that tracks U.S. stocks with a small market capitalization. The 11 major S&P 500, S&P MidCap 400 and S&P SmallCap 600 Sector Indices are capitalization-weighted and comprised of S&P 500, S&P MidCap 400, and S&P SmallCap 600 constituents, respectively, representing a specific sector. The S&P Composite 1500 Index is comprised of the S&P 500, S&P MidCap 400 and S&P SmallCap 600 Indices. 

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The next blog post will resume Thursday, July 5th, 2018.  Have a great 4th of July!
Posted on Thursday, June 28, 2018 @ 12:53 PM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.