Market Update: Analyzing the sectors

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This week in the stock market

  • At Thursday’s closing, the Nasdaq composite, which is based on 100+ of the world’s leading technology companies, was down -0.70%. This was a contrast to many of the other major indices, which were slightly up.
  • Facebook was one of the biggest losers this week (-1.65% at Thursday’s close) as news surfaced regarding its alleged ties to at least four Chinese companies. This loss could have been partially to blame for the overall tech sector decline (more on that below).
  • The financial sector was able to offset some of the loss caused by tech. Bank stocks increased this week due to the rise in yield (returns that investors are gaining) for the benchmark 10-year Treasury note.

Tech stocks declined mid-week

Although the tech sector is having a strong 2018 overall, with tech stocks up +27.74% year to date (YTD), this week things were at a slight decline with companies such as Facebook Inc. ==(FB)== -1.65%, Microsoft Corp. ==(MSFT)== -1.57%, and Alphabet inc. ==(GOOG)== -1.15% pushing the Nasdaq composite down as of closing Thursday. Government talks of stiffer regulation for many technology companies could be weighing on the sector. As a MoneyLion Plus member, you are invested in the Vanguard Total Stock Market Fund ETF (VTI), which invests 19.3% of its assets within the Technology sector (6/07/2018). Additionally, you are diversified among 10 other sectors as well (more details below).

Facebook allegedly linked to companies in China

News was released this week that tech giant Facebook has an alleged data sharing partnership with at least four Chinese companies. The most notable reported relationship was with the telecommunications equipment company Huawei, which had been flagged previously by U.S. intelligence officials as a possible national security threat. Facebook’s agreement with the Chinese companies purportedly gave Huawei access to user information such as work and education history, relationship status, and “likes.” Facebook officials have publicly stated that any shared data stayed on users’ phones and was not transferred to the Chinese companies’ servers. They also announced that all four contracts were still intact, but that plans to wind down the Huawei agreement were in place for end-of-week.

Financial sectors rallied this week

Financial stocks were able to offset some of the tech sector’s losses this week, with banks such as JPMorgan Chase & Co. ==(JPM)== and Goldman Sachs Group Inc. ==(GS)== among the biggest boosters. These increases could be due to the rise in bond yields, specifically the 10-year treasury note yield, which is the amount of return an investor earns from this type of bond. U.S. treasury rates rose this week in anticipation of the European Central Bank (ECB) tapering off its bond-buying program, which was meant to pump money into the economy, encourage lending, and stimulate growth.

There are 11 stock market sectors

As previously mentioned, MoneyLion Plus members are diversified among all 11 market sectors via the VTI ETF. The stock market has a total of 11 major sectors that represent significant areas of the economy. The ==Vanguard Total Stock Market ETF (VTI)==, in which you are invested, is distributed as follows:

  • Financial 20.5%
  • Technology 19.3%
  • Consumer Services 13.3%
  • Industrials 13.1%
  • Health Care 12.6%
  • Consumer Goods 8.1%
  • Oil & Gas 6.0%
  • Utilities 2.9%
  • Basic Materials 2.5%
  • Telecommunications 1.7%
  • Other 0.0%

*as of 6/07/2018

These percentages are variable because the VTI ETF seeks to track the performance of the overall stock market.

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