If you managed to sleep by means of May or just averted your brokerage app, congratulations.
You is likely to be sitting on some positive factors regardless of the key averages punishing traders with gut-wrenching drops of as much as 10% on the month’s lows.
When the mud settled, the S&P 500 (^GSPC) completed fractionally increased whereas the Dow (^DJI) inched up simply 13 factors. The Nasdaq Composite (^IXIC) misplaced simply over 2.1% in May.
A six-day rally to shut the month of May stemmed the hemorrhaging, however actuality nonetheless smarts. The Nasdaq Composite simply posted its fourth month-to-month lack of the yr — one thing it hasn’t achieved since 2002.
That index — together with the S&P 500 shopper discretionary (^SP500-25) and communication companies sectors (^SP500-50) — are all nonetheless down greater than 20% in 2022.
Energy shares had been once more the standout in May, minting one other 16% for the Energy Select Sector SPDR Fund (XLE). XLE is now up an eye-watering 57% this yr because of the efforts of Warren Buffett-owned Chevron (CVX) and Occidental Petroleum (OXY) — amongst many others.
On the retail entrance, shopper staples shares are getting hammered identical to their discretionary cousins, with these sectors down 4.1% and 5.1%, respectively, this month.
Those Walmart (WMT) and Target (TGT) earnings that led to their greatest drubbing for the reason that 1987 crash? Those losses stung, with Walmart settled down 16% for the month of May, and Target off 29%. And some smaller names within the sector fared worse, with Abercrombie & Fitch (ANF) shedding 41% and Bed Bath & Beyond (BBBY) plummeting 37%.
One brilliant spot in May was the semiconductor trade.
These shares largely averted the pounding that a lot of the market took, and used the most recent rally to claw again early-month losses after which some.
Most of the chip names (yellow, under) closed within the inexperienced for May, although they’re all sitting on losses — some substantial — for the yr.
Nvidia (NVDA) is the worst off within the basket — down 37% year-to-date. Advanced Micro Devices (AMD) gained 19% in May however continues to be down 29% in 2022. Fabricators and analog built-in circuit-makers are the least worst-off this yr — Texas Instruments (TXN), Analog Devices (ADI), and GlobalFoundries (GFS) are all down lower than 10% in 2022.
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Contrast this efficiency with among the disasters within the software program house the place cloud and cybersecurity corporations proceed to get pummeled.
Okta (OKTA), Zscaler (ZS), and Snowflake (SNOW) every shed 1 / 4 of their worth in May alone and are every down 50% or worse this yr. Gaming corporations are faring higher than most, with Activision Blizzard (ATVI) up 3.0% in May and 17% on the yr. Electronic Arts (EA) mirrors these returns — up 17% on the month and down 5.0% on the yr.
But let’s not overlook — many of those software-related names have fared as poorly as many names did after the Nineteen Nineties tech bubble popped.
With these names getting low cost, some have been scooped up by traders in M&A offers, together with Broadcom’s (AVGO) transfer to purchase VMWare (VMW) in what can be one of many greatest tech offers ever.
A flat month, and a strong rally to cap it off, nevertheless, does not precisely change the character of this market.
Mother Market is an skilled at retaining concern in greed in test. Greedy bulls and bears alike can each get punished in a trendless, directionless market. “If they do not scare you out, they put on you out,” says Brian Shannon at AlphaTrends.internet.
So far in 2022, the longest rally of the yr lasted nearly about two weeks again in March. If the present bounce does materialize into one thing extra, it is value remembering that many Wall Street merchants and analysts had been calling for a capitulation or washout to new lows. That did not occur but, and it does not even must.
As June begins we’re formally coming into the summer season doldrums, throughout which many merchants head to the seaside, leaving an already-illiquid markets a bit extra illiquid.
Instead of “promote in May and go away,” maybe the brand new market mantra needs to be, “hedge in May and go away.”
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Jared Blikre is a reporter targeted on the markets on Yahoo Finance Live. Follow him @SPYJared.
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