Based on the attached SPX GICS Sector table from the WEl function below, which sector has contributed the largest daily decrease to the SPX Index at this time?
Information Technology
Health Care
Industrials
The Correct Answer and Explanation is :
To analyze which sector has contributed the largest daily decrease to the SPX Index from the sectors you mentioned (Information Technology, Health Care, and Industrials), you would need to:
- Identify Sector Performance: Look at the daily performance data for each sector. This typically involves examining the percentage change in the value of the sector index for each of the three sectors you’re interested in. For example, the sector’s performance can be expressed as the percentage change in its index value compared to the previous day.
- Compare Contributions to SPX: Each sector’s contribution to the S&P 500 (SPX) Index is proportional to its market capitalization and how much its sector index has moved. The larger the market cap of the sector, the more significant its impact will be on the overall SPX movement. So, you’ll compare both the percentage change in each sector and its weight in the index.
- Determine the Largest Decrease: The sector that has the largest negative percentage change and is weighted heavily in the SPX will contribute the most to the overall index’s decrease.
- Information Technology: This is typically the largest sector by market cap and, as a result, has a significant influence on the S&P 500. Even a small drop can result in a notable impact on the overall index.
- Health Care: This sector generally has a large market cap as well, but its volatility is often lower than that of Information Technology.
- Industrials: This sector has a smaller weight than Information Technology and Health Care, so even a notable decrease may have a more limited impact on the SPX.
In conclusion, to determine which sector contributed the most to the SPX’s daily decrease, you would typically need to examine both the individual performance of the sectors and their weight in the S&P 500. If Information Technology experienced a significant drop, it would likely contribute the largest decrease to the SPX Index, given its market capitalization weight.