Topline
High-profile collapses in bank stocks and losses for major healthcare and energy companies headlined the biggest names losing out on 2023’s broader market rally.
Key Facts
Banking turmoil was behind much of the market’s less fortunate spots; investors in First Republic, Signature and Silicon Valley Bank saw their investments turn to dust earlier this year after they became three of the four largest American banks to ever fail, with each subsequently losing their spots on the S&P 500.
Still, 19 of the S&P’s 50 worst performers year-to-date are financial services stocks, including slumping but still alive regional banks KeyCorp (down 45%) and Zions (down 43%), the second and third-worst performers on the S&P, respectively.
Broadly, the S&P’s financial sector is down 2% year-to-date, making it the worst-performing sector, followed by energy (down 8%), utilities (8%) and healthcare (3%).
Pharmaceutical giant Pfizer (down 27%) is the worst-performing stock with a market capitalization over $200 billion due in part to a decline in Covid-19 vaccine sales; vaccine rival Moderna is similarly down 33%.
Overall, Advance Auto Parts (down 51%) is the S&P’s worst performer of 2023 after it fell far short on its first quarter earnings estimates as profits dwindled due to price cuts.
Key Background
The slump in energy, healthcare and utility stocks follows a year in which the three sectors were the only positive returners on the S&P. The energy sector gained 66% in 2022 as soaring oil and commodity prices led to record profits at oil and gas giants like Chevron and Exxon, whose shares each touched all-time highs last year. But the well’s run dry for the sector thus far this year as energy prices stabilized. Pfizer and Moderna’s combined market capitalization is down some $260 billion from September 2021 as each reported 30% and 70% annual declines in revenue during 2023’s first quarter and forecasted further pain as the pandemic subsides.
Crucial Quotes
Small and mid-sized banks “will have a very difficult time moving forward,” Wells Fargo Investment Institute Sameer Samana said on a conference call last month, putting a sell rating for the regional banking stocks even after they plunged following prior failures. “It’s not just a 30-day flash in the pan and you go merrily into the night, this crisis could take 12-18 months to play out” and possibly claim more banks, Samana’s colleague Darrell Cronk added.
Tangent
Outside the S&P, retailer Walgreens (down 24%) is the worst performer on the Dow Jones Industrial Average as the pharmacy reported a steep decline in Covid-related revenues, and Chinese retailer JD.com (down 39%) is the Nasdaq’s biggest loser as concerns about China’s economic recovery mounted.
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