2023 was a strong year for equity investors in the S&P 500, with the index gaining over 25%. The first quarter of 2024 continued this upward trend, with the S&P 500 gaining nearly 7%. However, April saw a market correction, with the index giving back about half of its Q1 gains.

While the overall market rallied in 2023, sector performance diverged as investors saw relative value in different industries. Technology was the standout winner, rising by 55%. Other sectors that had strong performances included the communications services and consumer discretionary, which rose 51% and 38%, respectively. The sudden and rapid deployment and use of artificial intelligence (AI) along with robust consumer spending helped these sectors. Two sectors that struggled the most in 2023 were utilities which declined 10% and energy that was 4% lower over 2023. The latter of which was probably affected by China’s economic slowdown.

This dispersion of 65% between the best and worst performing sectors shows how relative sector trading can provide alpha opportunities. This also holds true for overlaying a broader portfolio to increase or decrease exposure to a certain sector. Figure 1 below highlights Select Sector performance for the full year of 2023 as well as showing Q1 2024 performance.

The first quarter of 2024 saw the bull market continue, defying headwinds like higher-than-expected inflation, the removal of projected 2024 Federal Open Market Committee (FOMC) cuts, and the looming threat of a U.S. government shutdown. This resilience suggests investor confidence in the underlying strength of the economy. However, a closer look reveals a more nuanced picture.

While the overall market remained buoyant, divergences emerged across different S&P sectors. Technology and healthcare sectors continued their upward climb, while the energy sector swung from negative to positive. In contrast, the real estate sector continued to struggle. This divergence highlights the increasing selectivity of investors, who are focusing on companies and sectors with strong growth potential and resilience to economic headwinds. This trend is likely to continue, with investors differentiating between winners and losers in the market.

April witnessed several notable events that significantly impacted market trends. One key development was the reversal in the healthcare sector. After closing at its high at the end of March, the healthcare index quickly reversed course when the White House did not increase payments for private Medicare as much as the market had anticipated. This news particularly affected healthcare insurance companies, which make up a significant portion of the index.

The energy sector was up 13.5% in the first quarter of 2024, outperforming the S&P 500. However, it experienced a softening in April, navigating a complex interplay of factors. While the underlying price of oil weakened, geopolitical uncertainties in the Middle East created market volatility. Concurrently, as the market anticipated fewer interest rate hikes, weakening oil prices, this capital intensive sector began to exhibit independent weakness.

The technology sector, after experiencing impressive gains in 2023, faced headwinds in April. While the index continued to move higher, the pace of its ascent slowed significantly compared to the previous year. March saw mostly sideways price action, and April witnessed a downward trend. This shift in momentum suggests that the market may be questioning the sector's ability to sustain its strong run of earnings, particularly given its large market capitalization of over $13 trillion and a price to equity ratio exceeding 25. The emergence of AI technology has undoubtedly been a driving force behind the sector's growth. However, investors are now scrutinizing whether this growth can be sustained in the face of rising interest rates, potential economic slowdown, and increasing competition.

As we enter the latter half of 2024, investors face a complex landscape characterized by economic uncertainty, persistent inflation, and an evolving FOMC response. This environment underscores the importance of focusing on relative sector performance rather than solely on the overall market direction.

Several key factors will influence sector performance in the coming months:

  • Macroeconomic factors impacting earnings: Changes in energy prices, interest rates, and global economic growth will significantly impact corporate earnings across different sectors. Investors need to carefully assess these macro factors and their potential impact on individual companies and industries.
  • Continued application of artificial intelligence: The ongoing development and adoption of AI technology will create both opportunities and challenges for various sectors. Investors need to identify companies and industries that are best positioned to leverage AI for competitive advantage and growth.

By focusing on relative sector performance, investors can potentially generate alpha even in a challenging market environment. This approach involves identifying sectors that are expected to outperform or underperform the broader market based on their specific fundamentals and growth prospects.

So what sector opportunities and risks may be present in the remainder of 2024?


The energy sector has been a standout sector year-to-date with a 12% return through the end of April. Continued geopolitical uncertainty carries the potential for the sector to experience bouts of heightened volatility. Changes in interest rate expectation can influence price returns as firms in the sector adjust capital expenditures. The production of U.S. crude has replaced some of the diminished OPEC output, but demand remains weak. China, a major consumer of oil, had a slower 2023 economy and could continue to suppress oil demand in the near-term in turn leading to lower oil prices. Risk management will be important for investors in this sector.


Financial stocks have emerged as one of the better performing sectors year to date through April. However, with recent economic data indicating a slowdown in consumer sentiment, ongoing quantitative tightening, and the Federal Open Market Committee (FOMC) likely to maintain higher interest rates for an extended period, the Financial Sector faces a critical juncture.

Several key factors will influence the performance of financial stocks in the coming months:

  • Economic slowdown: A slowdown in consumer spending and economic growth could negatively impact the earnings of banks and other financial institutions. Investors need to assess the potential impact of this slowdown on individual companies and the overall sector.
  • Quantitative tightening: The Federal Reserve's ongoing quantitative tightening program is reducing liquidity in the financial system, which could impact lending activity and profitability for banks. Investors need to monitor the pace and extent of quantitative tightening and its potential consequences for the Financial Sector.
  • Higher interest rates: The FOMC's decision to maintain higher interest rates for a longer period could benefit banks by increasing net interest margins. However, higher rates could also dampen economic activity and potentially lead to loan defaults. Investors need to carefully weigh the potential benefits and risks of higher interest rates for the financial sector.


The healthcare sector, traditionally viewed as a defensive haven during periods of economic uncertainty, has faced headwinds in recent months. With the disappointment of increased government spending, the Healthcare Sector moved lower, experiencing a decline of nearly 4% in April from its prior month high. However, this downturn could present potential opportunities for investors seeking value in this sector. As the market adjusts to revised earnings estimates and lower price to earnings ratios for the sector, healthcare stocks could become increasingly attractive. Investors should also consider technological advancements that can further increase efficiencies for this sector.


The technology sector rose over 55% in 2023, doubling the return of the S&P 500. Year to date through the end of April, the technology sector is 2% higher on the year while the S&P 500 is up 6%. This extremely large and well-watched sector seems poised to continue to benefit from the AI investment theme. Nevertheless, market participants study earning releases to determine if earnings can continue their impressive run of growth. For example in Q1, Amazon earnings beat expectations, but the firm’s revenue guidance for Q2 was below that of current estimates. Given tech’s dominance over the last few years it will likely continue to be a large and liquid sector, but could be more volatile in the future.


2023 was a year of significant market movement, with the S&P 500 experiencing strong gains followed by a correction in April 2024. While the overall market showed resilience, sector performance diverged considerably, highlighting the importance of relative sector analysis for alpha generation.

Looking ahead, investors face a complex landscape characterized by economic uncertainty, inflation and evolving FOMC policies. Macroeconomic factors, AI adoption and relative sector performance will significantly impact sector performance in the coming months. Investors need to carefully assess these factors and identify companies and industries best positioned for growth and resilience.

CME Group Select Sector futures offer valuable tools for managing risk and gaining exposure to specific sectors, allowing investors to navigate the dynamic market environment and capitalize on potential opportunities.







Q1-2024 ADVT ($M)


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Source: CME Group, Bloomberg and SPDJI

All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.

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