Financials Struggle to Hold Second Spot in S&P 500

Technology is the largest sector weight in the S&P 500 at just over 23%, but the real tussle for notoriety in the benchmark U.S. equity index is between healthcare and financial services for the second spot. Financials ceded that spot, by a hair, to healthcare on Tuesday.

The Financial Select Sector SPDR (NYSEArca: XLF), the largest exchange traded fund dedicated to the financial services sector, is up less than 1% year-to-date while only energy has performed worse than financial services this year. On the other hand, the Health Care Select Sector SPDR ETF (NYSEArca: XLV) is up almost 10%.

As of Tuesday’s “close, financials lost their #2 ranking in SPX by market capitalization. Financials fell to 13.82% of SPX’s market cap. IT continues to rank as the largest sector with 23.23%. Health Care is now once again the second largest sector, at 13.83% of the Index,” according to a Keefe, Bruyette & Woods note posted by Crystal Kim of Barron’s.

The financial sector valuations still look relatively cheap, compared to the broader market. The sector’s valuations are still about 25% below the average since the early 1990s.