The Best and Worst Performing Sectors in 2019 - Visual Capitalist
Connect with us

Markets

The Best and Worst Performing Sectors in 2019

Published

on

The Best and Worst Performing Sectors in 2019

The Best and Worst Performing Sectors in 2019

If you think back almost 12 months, you’ll remember that the markets opened the year with extreme levels of volatility.

Stocks had just finished the worst year in a decade. Then in early January, Apple cut its earnings guidance after the company had already lost over $400 billion in market capitalization. The S&P 500 and DJIA seesawed, suggesting that the lengthy bull run could come to an end.

Yet, here we are a year later ⁠— we’re wrapping up the decade with a banner year for the S&P 500. As of the market close on December 30, 2019, stocks were up 28.5% to give the index what is expected to be its second-best performance since 1998.

Winners and Losers

Today’s infographic pulls data from Finviz.com. We’ve taken their great treemap visualization of U.S. markets and augmented it to show the sectors that beat the frothy market in 2019, as well as the ones that lagged behind.

Below, we’ll highlight instances where sectors stood out as having companies that, with few exceptions, saw ubiquitously positive or negative returns.

Top Performing Sectors

1. Semiconductors
Semiconductor stocks soared in 2019, despite sales expected to shrink 12% globally. Although this seems counterintuitive at first glance, the context helps here: in 2018, there was hefty correction in the market – and the future outlook for the industry has also been revised to be rosier.

2. Credit Services
In case you didn’t get the memo, the world is increasingly going cashless — and payments companies have been licking their lips. Mastercard, Visa, American Express, Capital One, and Discover were just some of the names that outperformed the S&P 500 in 2019.

3. Aerospace / Defense
The vast majority of companies in this market, including Lockheed Martin, Raytheon, and United Technologies, all beat the market in 2019. One notable and obvious exception to this is Boeing, a company that saw its stock get hammered after the Boeing 737 Max model was grounded in the wake of several high-profile crashes.

4. Electronic Equipment
Apple shareholders had a bit of a wild ride in 2018. The company had risen in value to $1.1 trillion, but then it subsequently lost over $400 billion in market capitalization by the end of the year. Interestingly, in 2019, the stock had a strong bounce back year: the stock increased 84.8% in value, making it the best-performing FAANG stock by far.

5. Diversified Machinery
Manufacturers such as Honeywell, General Electric, Cummins, and Danaher saw solid double-digit gains in 2019, despite a slowing U.S. industrial sector. For GE in particular, this was a bit of a comeback year after its stock was decimated in 2018.

Honorable mentions:
Construction Materials, Medical Labs & Research, Gold, Medical Appliances, Insurance Brokers

Worst Performing Sectors

1. Oil
Big oil, independent oil, and many oil services companies all had a year to forget. While this is not unusual in a highly cyclical industry, what is strange is that this happened in a year where oil prices (WTI) increased 36% for the best year since 2016.

2. Wireless Communications
Growing anticipation around 5G was not enough to buoy wireless companies in 2019.

3. Foreign Banks
It’s a tough environment for European banks right now. Not only is it late in the cycle, but banks are trying to make money in an environment with negative rates and large amounts of Brexit uncertainty. The strong U.S. dollar doesn’t help much, either.

4. Apparel
The CEO of The Gap has described U.S. tariffs as “attacks on the American consumer”, providing just another nail in the coffin to the bottom line of the retail industry. Given these additional headwinds, it’s not surprising that companies like The Gap, American Eagle, Nordstrom, Urban Outfitters, and Abercrombie & Fitch all finished the year in the red.

5. Foreign Telecoms
Continued strength of the U.S. dollar weighed on foreign telecoms, which make the majority of their revenues in other currencies.

Subscribe to Visual Capitalist
Click for Comments

Technology

Thematic Investing: 3 Key Trends in Cybersecurity

Cyberattacks are becoming more frequent and sophisticated. Here’s what investors need to know about the future of cybersecurity.

Published

on

Global X Cybersecurity ETF

The following content is sponsored by Global X ETFs
Global X Cybersecurity ETF

Thematic Investing: 3 Key Trends in Cybersecurity

In 2020, the global cost of cybercrime was estimated to be around $945 billion, according to McAfee.

It’s likely even higher today, as multiple sources have recorded an increase in the frequency and sophistication of cyberattacks during the pandemic.

In this infographic from Global X ETFs, we highlight three major trends that are shaping the future of the cybersecurity industry that investors need to know.

Trend 1: Increasing Costs

Research from IBM determined that the average data breach cost businesses $4.2 million in 2021, up from $3.6 million in 2017. The following table breaks this figure into four components:

Cost ComponentValue ($)
Cost of lost business$1.6M
Detection and escalation$1.2M
Post breach response$1.1M
Notification$0.3M
Total$4.2M

The greatest cost of a data breach is lost business, which results from system downtimes, reputational losses, and lost customers. Second is detection and escalation, including investigative activities, audit services, and communications to stakeholders.

Post breach response includes costs such as legal expenditures, issuing new accounts or credit cards (in the case of financial institutions), and other monitoring services. Lastly, notification refers to the cost of notifying regulators, stakeholders, and other third parties.

To stay ahead of these rising costs, businesses are placing more emphasis on cybersecurity. For example, Microsoft announced in September 2021 that it would quadruple its cybersecurity investments to $20 billion over the next five years.

Trend 2: Remote Work Opens New Vulnerabilities

According to IBM, companies that rely more on remote work experience greater losses from data breaches. For companies where 81 to 100% of employees were remote, the average cost of a data breach was $5.5 million (2021). This dropped to $3.7 million for companies that had under 10% of employees working from home.

A major reason for this gap is that work-from-home setups are typically less secure. Phishing attacks surged in 2021, taking advantage of the fact that many employees access corporate systems through their personal devices.

Type of AttackNumber of attacks in 2020Number of attacks in 2021Growth (%)
Spam phishing1.5M10.1M+573%
Credential phishing5.5M6.2M+13%

As detected by Trend Micro’s Cloud App Security.

Spam phishing refers to “fake” emails that trick users by impersonating company management. They can include malicious links that download ransomware onto the users device. Credential phishing is similar in concept, though the goal is to steal a person’s account credentials.

A tactic you may have seen before is the Amazon scam, where senders impersonate Amazon and convince users to update their payment methods. This strategy could also be used to gain access to a company’s internal systems.

Trend 3: AI Can Reduce the Cost of a Data Breach

AI-based cybersecurity can detect and respond to cyberattacks without any human intervention. When fully deployed, IBM measured a 20% reduction in the time it takes to identify and contain a breach. It also resulted in cost savings upwards of 60%.

A prominent user of AI-based cybersecurity is Google, which uses machine learning to detect phishing attacks within Gmail.

Machine learning helps Gmail block spam and phishing messages from showing up in your inbox with over 99.9% accuracy. This is huge, given that 50-70% of messages that Gmail receives are spam.
– Andy Wen, Google

As cybercrime escalates, Acumen Research and Consulting believes the market for AI-based security solutions will reach $134 billion by 2030, up from $15 billion in 2021.

Introducing the Global X Cybersecurity ETF

The Global X Cybersecurity ETF (Ticker: BUG) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx Cybersecurity Index. See below for industry and country-level breakdowns, as of June 2022.

Sector (By security type)Weight
Cloud28.0%
Network25.1%
Identity17.7%
Internet15.0%
Endpoint12.8%
CountryWeight
🇺🇸 U.S.71.6%
🇮🇱 Israel13.2%
🇬🇧 UK8.2%
🇯🇵 Japan5.5%
🇰🇷 South Korea0.9%
🇨🇦 Canada0.6%

Totals may not equal 100% due to rounding.

Investors can use this passively managed solution to gain exposure to the rising adoption of cybersecurity technologies.

Subscribe

Subscribe to Visual Capitalist

You may also like

Continue Reading

Markets

Visualizing Major Layoffs At U.S. Corporations

This infographic highlights the accelerating pace of layoffs so far in 2022, as businesses cut costs ahead of a potential recession.

Published

on

Visualizing Major Layoffs at U.S. Corporations

Hiring freezes and layoffs are becoming more common in 2022, as U.S. businesses look to slash costs ahead of a possible recession.

Understandably, this has a lot of people worried. In June 2022, Insight Global found that 78% of American workers fear they will lose their job in the next recession. Additionally, 56% said they aren’t financially prepared, and 54% said they would take a pay cut to avoid being laid off.

In this infographic, we’ve visualized major layoffs announced in 2022 by publicly-traded U.S. corporations.

Note: Due to gaps in reporting, as well as the very large number of U.S. corporations, this list may not be comprehensive.

An Emerging Trend

Layoffs have surged considerably since April of this year. See the table below for high-profile instances of mass layoffs.

CompanyIndustryLayoffs (#)Month
PelotonConsumer Discretionary2,800February
FunkoConsumer Discretionary258April
RobinhoodFinancial Services~400April
Nektar TherapeuticsBiotechnology500April
CarvanaAutomotive2,500May
DomaFinancial Services310May
JP Morgan Chase & Co.Financial Services~500June
TeslaAutomotive200June
CoinbaseFinancial Services1,100June
NetflixTechnology300June
CVS HealthPharmaceutical208June
StartTekTechnology472June
FordAutomotive8,000July
RivianAutomotive840July
PelotonConsumer Discretionary2,000July
LoanDepotFinancial Services2,000July
InvitaeBiotechnology1,000July
LyftTechnology60July
MetaTechnology350July
TwitterTechnology<30July
VimeoTechnology72July
RobinhoodFinancial Services~795August

Here’s a brief rundown of these layoffs, sorted by industry.

Automotive

Ford has announced the biggest round of layoffs this year, totalling roughly 8,000 salaried employees. Many of these jobs are in Ford’s legacy combustion engine business. According to CEO Jim Farley, these cuts are necessary to fund the company’s transition to EVs.

We absolutely have too many people in some places, no doubt about it.
– Jim Farley, CEO, Ford

Speaking of EVs, Rivian laid off 840 employees in July, amounting to 6% of its total workforce. The EV startup pointed to inflation, rising interest rates, and increasing commodity prices as factors. The firm’s more established competitor, Tesla, cut 200 jobs from its autopilot division in the month prior.

Last but not least is online used car retailer, Carvana, which cut 2,500 jobs in May. The company experienced rapid growth during the pandemic, but has since fallen out of grace. Year-to-date, the company’s shares are down more than 80%.

Financial Services

Fearing an impending recession, Coinbase has shed 1,100 employees, or 18% of its total workforce. Interestingly, Coinbase does not have a physical headquarters, meaning the entire company operates remotely.

A recession could lead to another crypto winter, and could last for an extended period. In past crypto winters, trading revenue declined significantly.
Brian Armstrong, CEO, Coinbase

Around the same time, JPMorgan Chase & Co. announced it would fire hundreds of home-lending employees. While an exact number isn’t available, we’ve estimated this to be around 500 jobs, based on the original Bloomberg article. Wells Fargo, another major U.S. bank, has also cut 197 jobs from its home mortgage division.

The primary reason for these cuts is rising mortgage rates, which are negatively impacting the demand for homes.

Technology

Within tech, Meta and Twitter are two of the most high profile companies to begin making layoffs. In Meta’s case, 350 custodial staff have been let go due to reduced usage of the company’s offices.

Many more cuts are expected, however, as Facebook recently reported its first revenue decline in 10 years. CEO Mark Zuckerberg has made it clear he expects the company to do more with fewer resources, and managers have been encouraged to report “low performers” for “failing the company”.

Realistically, there are probably a bunch of people at the company who shouldn’t be here.
– Mark Zuckerberg, CEO, Meta

Also in July, Twitter laid off 30% of its talent acquisition team. An exact number was not available, but the team was estimated to have less than 100 employees. The company has also enacted a hiring freeze as it stumbles through a botched acquisition by Elon Musk.

More Layoffs to Come…

Layoffs are expected to continue throughout the rest of this year, as metrics like consumer sentiment enter a decline. Rising interest rates, which make it more expensive for businesses to borrow money, are also having a negative impact on growth.

In fact just a few days ago, trading platform Robinhood announced it was letting go 23% of its staff. After accounting for its previous layoffs in April (9% of the workforce), it’s fair to estimate that this latest round will impact nearly 800 people.

Continue Reading

Subscribe

Popular