Healthcare Sector – Without GE Dow Increases 9.3%
Healthcare was the best sector in Q3 as it increased by 14.1%. That was its best quarter since Q3 2013. The next two best sectors were the industrials and tech which were up 9.7% and 8.5%.
While tech has changed its makeup, Apple remains in the sector. Apple played a huge role in tech’s performance as it was up 21.95% in Q3. On Friday, the best performers were real estate and the utilities which rose 1.31% and 1.51%.
Financials and materials were the worst as they fell 1.06% and 0.68%.
The Nasdaq was up 5 basis points on Friday and 7.2% for the quarter as it was its best performance since 2017. Dow had a comeback as it increased 9.3%.
It certainly was helped by the fact that GE was eliminated as its stock is down 12.95% in the past month, while Walgreens was up 6.81% in the past month.
This exhibits why indexes move higher. They eliminate the failing companies and add growing companies. By the time companies make the index a lot of their growth has been realized. However, they also have less risk.
The Russell 2000 had the worst quarter as it was up 3.26%.
While American growth is still strong, investors haven’t been respecting the risk a trade war presents.
They reversed the short Dow, long Russell 2000 trade. The Shanghai Index only fell 0.92% in Q3. It has increased 6.39% since September 17th despite the growth slowdown in China.
Healthcare Sector – Best S&P 500 Quarter Since 2013
The S&P 500 was flat on Friday, but not for the quarter as it was its best one since Q4 2013.
S&P 500 was up 7.2% in Q3. It shirked worries about a hawkish Fed, an economic slowdown, tariffs, valuations, and the mid-term elections.
As usual, earnings growth drove stocks higher while the headlines proved to be meaningless.
The CNN Fear and Greed index is at 47 which still supports my neutral stance on equities in the near term.
I still think a trade war is a big potential risk, but we must acknowledge how over 20% earnings growth can soothe all fears. On September 30th, the deadline for America to make a trade deal with Canada will expire.
