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Visualizing S&P 500 Performance in 2022, by Sector

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Visualizing S&P 500 Performance in 2022, by Sector

Tracking indexes over the course of a year reveals a lot about market trends and sentiment. The S&P 500’s performance over the course of 2022 is a great example.

Throughout the year, inflation rates have remained high and interest rates have likewise been climbing around the world. Accompanied by the looming threat of a recession, some sectors have been hit harder than others.

The above visualization from Jan Varsava shows U.S. dividend-adjusted stock performance for each company in the S&P 500 index in 2022, from the start of the year through the end of September.

S&P 500 Performance (Jan 1 to Sep 30, 2022)

In 2022, the S&P 500 index dropped -23.9% through the end of September. Let’s take a look at some of the major trends from this year’s stock market.

S&P 500 Sector Performance2022 Q1–Q3
Energy+30.71%
Utilities-8.58%
Consumer Staples-13.52%
Health Care-14.15%
Industrials-21.72%
Financials-22.41%
Basic Materials-24.90%
Consumer Cyclical-30.32%
Real Estate-30.43%
Technology-31.93%
Communication Services-39.43%

Winners

The energy sector has been the noticeable standout and performed significantly well since the beginning of the year, as sanctions surrounding Russia impacted oil and gas supplies resulting in sharp price increases.

Top performing energy stocks as of September 30th, 2022 included Occidental Petroleum (OXY) up 112% year to date (YTD), and Marathon Petroleum (MPC) which rose 52% YTD.

Traditional defensive sectors such as healthcare, consumer staples, and utilities, although down for the year, also performed better than the overall index.

Losers

Growth stocks in both technology and communication services underperformed since the beginning of this year, as the value of future earnings were impacted by rising interest rates increasing the cost of capital.

Real estate, consumer cyclical (or consumer discretionary), and materials also underperformed compared to the overall index.

The trends are reflective of the fact that value stocks like energy and healthcare historically outperform growth stocks during periods of rising rates, though there are many varying factors that can alter performance.

Major Shifts in Q4

But as October has shown, the market is far from settled.

Lower-than-expected earnings and overspending caused Meta Platforms, Inc. (META) to drop 24% over five days and Amazon to drop 13%.

And the final impact of rising interest rates have yet to be fully felt, though indexes generally fare well in the year following. Since 1927, the average S&P 500 return sits at around 11.5% in the 12 months following peak inflation.

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This article was published as a part of Visual Capitalist's Creator Program, which features data-driven visuals from some of our favorite Creators around the world.

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Technology

Timeline: The Shocking Collapse of Silicon Valley Bank

Silicon Valley Bank was shuttered by regulators becoming the largest bank to fail since the height of the Financial Crisis. What happened?

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Timeline: The Shocking Collapse of Silicon Valley Bank

Just days ago, Silicon Valley Bank (SVB) was still viewed as a highly-respected player in the tech space, counting thousands of U.S. venture capital-backed startups as its customers.

But fast forward to the end of last week, and SVB was shuttered by regulators after a panic-induced bank run.

So, how exactly did this happen? We dig in below.

Road to a Bank Run

SVB and its customers generally thrived during the low interest rate era, but as rates rose, SVB found itself more exposed to risk than a typical bank. Even so, at the end of 2022, the bank’s balance sheet showed no cause for alarm.

Summary of the SVB balance sheet at the end of 2022

As well, the bank was viewed positively in a number of places. Most Wall Street analyst ratings were overwhelmingly positive on the bank’s stock, and Forbes had just added the bank to its Financial All-Stars list.

Outward signs of trouble emerged on Wednesday, March 8th, when SVB surprised investors with news that the bank needed to raise more than $2 billion to shore up its balance sheet.

The reaction from prominent venture capitalists was not positive, with Coatue Management, Union Square Ventures, and Peter Thiel’s Founders Fund moving to limit exposure to the 40-year-old bank. The influence of these firms is believed to have added fuel to the fire, and a bank run ensued.

Also influencing decision making was the fact that SVB had the highest percentage of uninsured domestic deposits of all big banks. These totaled nearly $152 billion, or about 97% of all deposits.

ℹ️ The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per account, per bank, for depositors.

By the end of the day, customers had tried to withdraw $42 billion in deposits.

What Triggered the SVB Collapse?

While the collapse of SVB took place over the course of 44 hours, its roots trace back to the early pandemic years.

In 2021, U.S. venture capital-backed companies raised a record $330 billion—double the amount seen in 2020. At the time, interest rates were at rock-bottom levels to help buoy the economy.

Matt Levine sums up the situation well: “When interest rates are low everywhere, a dollar in 20 years is about as good as a dollar today, so a startup whose business model is “we will lose money for a decade building artificial intelligence, and then rake in lots of money in the far future” sounds pretty good. When interest rates are higher, a dollar today is better than a dollar tomorrow, so investors want cash flows. When interest rates were low for a long time, and suddenly become high, all the money that was rushing to your customers is suddenly cut off.”

YearU.S. Venture Capital ActivityAnnual % Change
2021$330B98%
2020$167B15%
2019$145B1%
2018$144B64%
2017$88B6%
2016$83B-3%

Source: Pitchbook

Why is this important? During this time, SVB received billions of dollars from these venture-backed clients. In one year alone, their deposits increased 100%. They took these funds and invested them in longer-term bonds. As a result, this created a dangerous trap as the company expected rates would remain low.

During this time, SVB invested in bonds at the top of the market. As interest rates rose higher and bond prices declined, SVB started taking major losses on their long-term bond holdings.

Losses Fueling a Liquidity Crunch

When SVB reported its fourth quarter results in early 2023, Moody’s Investor Service, a credit rating agency took notice. In early March, it said that SVB was at high risk for a downgrade due to its significant unrealized losses.

In response, SVB looked to sell $2 billion of its investments at a loss to help boost liquidity for its struggling balance sheet. Soon, more hedge funds and venture investors realized SVB could be on thin ice. Depositors withdrew funds in droves, spurring a liquidity squeeze and prompting California regulators and the FDIC to step in and shut down the bank.

What Happens Now?

While much of SVB’s activity was focused on the tech sector, the bank’s shocking collapse has rattled a financial sector that is already on edge.

The four biggest U.S. banks lost a combined $52 billion the day before the SVB collapse. On Friday, other banking stocks saw double-digit drops, including Signature Bank (-23%), First Republic (-15%), and Silvergate Capital (-11%).

NameStock Price Change, March 10 2023Unrealized Losses / Tangible Equity
SVB Financial-60%*-99%
First Republic Bank-15%-29%
Zions Bancorp-2%-47%
Comerica-5%-47%
U.S. Bancorp-4%-55%
Fifth Third Bancorp-4%-38%
Bank of America-1%-54%
Wells Fargo1%-33%
JPMorgan-1%-21%

Source: Morningstar Direct. *Represents March 9 data, trading halted on March 10.

When the dust settles, it’s hard to predict the ripple effects that will emerge from this dramatic event. For investors, the Secretary of the Treasury Janet Yellen announced confidence in the banking system remaining resilient, noting that regulators have the proper tools in response to the issue.

But others have seen trouble brewing as far back as 2020 (or earlier) when commercial banking assets were skyrocketing and banks were buying bonds when rates were low.

The whole sector is in crisis, and the banks and investors that support these assets are going to have to figure out what to do.-Christopher Whalen, The Institutional Risk Analyst

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