Similar to the stock market as a whole, returns for individual sectors of the stock market experience fluctuations. For example, a sector may outperform other sectors for a period of time and then underperform in subsequent periods. The chart above compares the performance of the Standard & Poor's 500 Index (S&P 500), including dividends, to its 11 underlying sectors for the twelve month periods ended September 30, 2017 (current period) and September 30, 2016 (prior period). The S&P 500 is an index consisting of 500 companies representing larger capitalization stocks traded in the U.S. and is a benchmark commonly used to measure the performance of the U.S. stock market.

The S&P 500 rose 18.61% for the current period, and 10 of the 11 sectors posted positive returns, with seven of those sectors posting double digit positive returns. In comparison, the S&P 500 rose 15.43% for the prior period, and all 11 sectors posted positive returns.

Four sectors outperformed the S&P 500 in the current period led by Financials (+36.21%), Information Technology (+28.88%), Industrials (+22.35%), and Materials (+21.26%). Energy (+0.16%) was the lowest positive performing sector in the current period, and Telecom Services (-0.14%) was the only negative sector in the current period. Generally improving U.S. economic conditions and discussion of policy changes contributed to the positive sector performances.

Market and sector returns fluctuate from year to year depending upon a variety of factors, which are very difficult to forecast. Therefore, it is important to understand the principles of investing before establishing an investment strategy to help ensure that it is consistent with your personal goals, risk tolerance, and time horizon.

© Copyright 2017 ICMA Retirement Corporation, All Rights Reserved. This information is intended for educational purposes only and is not to be construed as investment advice or a solicitation to buy or sell securities. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed here. Past performance is not necessarily indicative of future performance.