Comparing Sector Performance During the Last Two Bear Markets

Standard & Poor’s just released its most recent “Outlook Report,” and, as usual, it is full of fascinating market data.  One of the more interesting data sets is a table comparing the peak-to-trough declines of the major S&P 500 sectors, – energy, IT, financials, etc., – during the 2000-2002 and 2007-2009 bear markets:

Sector   Oct. 9, 2007 to
March 9, 2009
March 24th, 2000 to
Oct. 9, 2002
Energy (46.76%)             (18.49%)
Materials (59.55%)             (24.82%)
Industrials (65.15%)             (38.13%)
Cons. Discretionary (58.01%)             (41.17%)
Cons. Staples (31.23%)             +24.23%
Healthcare (39.88%)             (6.92%)
Financials (82.62%)             (25.14%)
Info. Technology (52.95%)             (82.37%)
Telecom (50.72%)             (74.07%)
Utilities (45.87%)             (47.72%)
S&P 500 Overall (56.78%)             (49.15%)

  *table reproduced with data from above-referenced S&P report

What’s fascinating is that while the overall market decline in both bear markets was similar, an investor in the 2000-2002 downturn could at least have hidden out in consumer staples, which actually gained 24% during the period, or in healthcare, which suffered only a modest decline.
However, the 2007-2009 decline was much worse overall, with no sector spared, and even the traditional defensive sectors, – utilities, healthcare, consumer staples, – suffering an average decline among the three sectors of a bit less than 40%.  I’m not sure if there’s a lesson to be learned here, but if there is, I guess it might be that sometimes diversification among sectors is beneficial, and other times it doesn’t help all that much.