November 2024 Sector SPDR Analyzer
Week Ending September 2, 2022
All major equity benchmark ETFs closed lower last week as fears over higher interest rates amid the worsening energy crisis in Europe dominated headlines. Small- and mid-cap ETFs fared worse than their large-cap counterparts in the S&P 500 (Table 1). Meanwhile foreign stocks were also broadly lower, in line with the decline in U.S. shares.
For this week’s valuation update we look at each ETF’s forward price-to-earnings (P/E) ratio versus its average over the past ten years. U.S. large-caps in both the S&P 500 SPDR (SPY) and Tech-heavy Invesco QQQ Trust (QQQ) trade at P/Es roughly in-line with their 10-year averages, while all of our other equity benchmarks trade at substantial discounts. Keep in mind however that current earnings estimates are falling for most broad market ETFs, implying that “real” P/Es may be higher than they appear.
TABLE 1: Major Benchmarks: Weekly Total Returns and Valuation Update
Week ending September 2, 2022
| Ticker | Fund | Return | Fwd. P/E | 10 yr. Avg | Prem/Disc. |
| SPY | SPDR S&P 500 ETF Trust | -3.2% | 16.6 | 17.8 | -6.7% |
| QQQ | Invesco QQQ Trust | -4.0% | 21.6 | 20.3 | 6.4% |
| MDY | SPDR S&P Midcap 400 ETF Trust | -4.2% | 11.9 | 14.9 | -20.1% |
| IWM | iShares Russell 2000 ETF | -4.7% | 16.1 | 31.5 | -48.9% |
| EFA | iShares MSCI EAFE ETF | -3.6% | 11.6 | 17.7 | -34.5% |
| EEM | iShares MSCI Emerging Markets ETF | -3.1% | 11.2 | 17.5 | -36.0% |
Source: FactSet Research Systems and ETF Research Center.
Meanwhile all 11 major sectors traded lower as well last week, with the defensive Utilities and Health Care sectors faring best, and Tech and Materials sinking the most. With a forward P/E ratio of more than 20x, the Utilities SPDR (XLU) remains nearly 20% richer than its 10-year average. For more data and analysis on any of the ETFs in the tables above or below, click on the fund’s ticker symbol.
TABLE 2: Major Sectors: Weekly Total Returns and Valuation Update
Week ending September 2, 2022
| Ticker | Fund | Return | Fwd. P/E | 10 yr. Avg | Prem/Disc. |
| XLC | Communication Services Select Sector SPDR* | -2.4% | 15.6 | 17.9 | -12.8% |
| XLY | Consumer Discretionary Select Sector SPDR | -2.6% | 23.6 | 26.2 | -9.9% |
| XLP | Consumer Staples Select Sector SPDR | -2.5% | 20.2 | 19.2 | 5.2% |
| XLE | Energy Select Sector SPDR | -3.5% | 8.7 | 30.6 | -71.6% |
| XLF | Financial Select Sector SPDR | -2.5% | 11.7 | 14.1 | -17.0% |
| XLV | Health Care Select Sector SPDR | -1.8% | 15.8 | 16.1 | -1.9% |
| XLI | Industrial Select Sector SPDR | -3.5% | 16.7 | 17.9 | -6.7% |
| XLB | Materials Select Sector SPDR | -4.9% | 13.2 | 16.5 | -20.0% |
| XLRE | The Real Estate Select Sector SPDR* | -4.0% | 17.9 | 19.6 | -8.7% |
| XLK | Technology Select Sector SPDR | -5.0% | 20.8 | 18.9 | 10.1% |
| XLU | Utilities Select Sector SPDR | -1.5% | 20.4 | 17.1 | 19.3% |
Source: FactSet Research Systems and ETF Research Center. *Note: Fewer than 10 years of valuation history available.
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