The Dollar’s Impact on Stock Sectors

I was curious to see what effect movements in the U.S. dollar have on different stock sectors. I took ten years of data. I then isolated all the days when the U.S. Dollar Index rose and saw how the 10 different stock sectors did relative to the S&P 500. I then did the same for when the Dollar Index fell.

Not surprisingly, the dollar has its greatest impact on the Energy and Materials sectors. When the dollar falls, those sectors outperform the rest of the market. When the dollar rises, Staples and Healthcare do the best against the market.

Interestingly, the impact of the dollar isn’t that strong on the other sectors. I was particularly surprised to see such a small effect on tech stocks.

(I apologize if my methodology is confusing. Just understand that the higher or lower number reflects how each sector performs when the dollar is weak or strong.)

Sector Weak $ Strong $
Energy 777.2% -91.4%
Material 591.8% -87.5%
Industrials 57.2% -34.4%
Financials 14.0% -49.6%
Tech -9.4% 43.3%
Utilities -27.7% 36.9%
Discretion -34.0% 94.5%
Telecom -55.1% 92.0%
Staples -58.6% 219.9%
Health Care -61.8% 223.4%

Posted by on February 22nd, 2017 at 12:31 pm


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