3 Sectors Lagging The S&P 500 By A Huge Amount

The S&P 500 index continues to trade near historical all-time highs but that doesn't mean every sector within the index is trading in the green for 2017. Quite the contrary, three sectors within the index are lagging the index by the widest margin seen in decades, according to Fundstrat Global Advisers.

As a whole, the S&P 500 index and the SPDR S&P 500 ETF Trust SPY is up around 9 percent this year, but energy (Energy Select Sector SPDR (ETF) XLE), telecommunications services (iShares Dow Jones US Telecom (ETF) IYZ and financial sectors XLF)are all down by an average of 7.7 percent. In fact, this under-performance represents the largest gap dating back all the way to 1990, and over the past three decades, the bottom three performing sector have never been energy, telecommunications services, and financials.

The Other Side Of The Story

While the three sectors are underperforming the broader index, this is occurring after a major runup, especially in the first quarter of last year, S&P Global's Erin Gibbs said during a recent CNBC "Trading Nation" segment.

Of particular note, the financial sector is "coming off froth valuations" after a notable 20 percent rally in the fourth quarter last year. Energy stocks can't be faulted as it is merely following the decline in oil prices while telecoms and other high dividend yielding sectors are seeing investors exiting their positions.

Given the underperformance so far in 2017, the three sectors are now approaching "reasonable valuations and reasonable pricing," Gibbs added.

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