If you own a fund tracking the S&P 500 Index, the damage has been limited. But if you’re one of the millions of investors holding individual stocks in that benchmark, the last month has been as harrowing as any in at least three years.
The issue is below the surface of the violent rotations going on daily among industries, demonstrated Monday when three sectors dropped by more than 1 percent while the full index slipped by half that. The S&P 500 is down more than 7 percent since its record close in late September while banks, automakers and raw materials suppliers have lost roughly twice as much.
For the broad indexes, one industry goes down, usually a cyclical sector reliant on growth, while a defensive industry cushions the blow. But for traders and active fund mangers levered into bets on economically sensitive companies, the result has been unrelenting pain.
While the S&P 500’s current peak-to-trough retreat trails other pullbacks that the market experienced this year, individual stocks are faring worse. Members of the index dropped an average 17 percent from their 52-week highs, compared with 15 percent at the market’s bottom in February. Such widespread losses were last seen in early 2016, when the market suffered its biggest sell-off in four years, according to data compiled by MKM Partners and Bloomberg.