Getting Technical: Identifying Seasonal Patterns for Sectors and Industries

Are you looking for a new tactical trade idea?  Well, analyzing equity sector and industry group seasonal performance may be one way to help refine your search. Here in April, we are encouraged by two sectors’ seasonal tendency to outperform the S&P 500 Index: industrials and consumer discretionary. Their relative outperformance stands out in our review of the last 20 years of S&P 500 returns during April, a month in which the index has already been generally good on average for equity investors, generating positive returns 75% of the time.

The S&P 500’s average price change for April has been 2.0%, with a best return of 9.4% and a worst return of -6.1% since 1997.  Comparing the price performance of an underlying sector or industry group with the broad-based index over a specific period can help identify potentially strong seasonal performers; however, nonseasonal factors still influence performance and should not be ignored.

The table below highlights sectors’ average over- and under-performance versus the S&P 500 during April since 1997, as well as the top-performing industry groups over the same time frame:

It’s interesting to note that at the sector level, energy and materials fared the best seasonally in April; however, select industry groups in both the industrials and consumer discretionary sectors topped the list in the above table. Let’s take a closer look at these two areas of historical S&P 500 sector relative strength over the past 20 years.

Industrials Sector Has Outperformed Broad-Based Stocks by Average of 0.8% Since 1997

The industrial sector has outperformed the S&P 500 index by 0.8% on average, with a high of 7.6% and a low of -3.4% since 1997. We highlight three S&P 500 industry groups which historically have had a tendency to outperform the equity benchmark in April.

  • Machinery, which outperformed the equity benchmark by 3.6% on average, with a high of 24% and a low of -3.1%.
  • Capital goods, which outperformed the equity benchmark by 1.9% on average, with a high of 12.6% and a low of -4.7%.
  • Aerospace and defense, which outperformed the S&P 500 by 1.7% on average, with a high of 11% and a low of -4.4%.

Consumer Discretionary Sector Has Outperformed Broad-Based Stocks by Average of 0.7% Since 1997

The consumer discretionary sector has outperformed the S&P 500 index by 0.7% on average, with a high of 8.4% and a low of -4.6% since 1997. We highlight two S&P 500 consumer discretionary groups that could potentially be seasonally strong in April.

  • Automobiles, which outperformed the equity benchmark by 5.9% on average, with a high of 79.2% and a low of -14.4%.
  • Media, which outperformed the equity benchmark by 1.4% on average, with a high of 9.6% and a low of -3%.

As always, please stay tuned to the LPL Research blog for continued reviews of S&P 500 seasonal patterns and data in the months ahead.



Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

The economic forecasts set forth in the presentation may not develop as predicted.
Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

Stock investing involves risk including loss of principal.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Because of their narrow focus, specialty sector investing, such as healthcare, financials, or energy, will be subject to greater volatility than investing more broadly across many sectors and companies.

This research material has been prepared by LPL Financial LLC.

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