The stock market climbed in ‘14, but not all sectors were equal

Published 7:09 am Thursday, January 1, 2015

It was another great year for the stock market in 2014, but as is often the case the gains were not evenly distributed across industries.

Many investors just wanted to play it safe with high-yielding, low-volatility stocks like power companies. A collapse in the price of oil left energy stocks with the biggest loss in the Standard & Poor’s 500 index. Airlines gained as their fuel costs dropped.

Here’s a breakdown:

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Utilities: In a year of ultra-low interest rates and bond yields, investors seeking income put money into the stocks of power companies and other utilities that pay big dividends. This normally low-key sector trounced the rest of the S&P 500 with a gain of 25 percent.

Health care: This industry has been turning in stellar earnings, and bounced back from an October slump faster than the rest of the market. The sector, which spans insurers, drugmakers, medical device makers and hospital owners, has outperformed the broader market for the fourth straight year. It rose 24 percent in 2014.

Information technology: Despite poor showings from industry giants like IBM and Google, much of the rest of the tech world had a great year. Game maker Electronic Arts more than doubled, the biggest winner in a sector that jumped 19 percent.

Financials: Banks, insurers and other financial stocks had a solid year. The biggest gains in this sector, however, were to be found in real estate companies, which S&P plans to carve out as a separate sector in August 2016. Essex Property Trust and Apartment Investment and Management led the increase in the financial sector, which increased 14 percent overall.

Consumer staples: Investors have long loved stalwart companies that make everyday goods like soft drinks, food, and household products. These companies, which include Kraft, PepsiCo and Safeway, tend to withstand downturns better than other parts of the market and often pay generous dividends. This sector rose 13 percent.

Consumer discretionary: These stocks had the best performance in the S&P 500 in 2013, driven by big gains in Netflix and Best Buy, but struggled to keep up in 2014. This group’s 8 percent gain lagged the 12 percent gain in the broader market, as several big media, luxury and retail names lagged. Mattel and Coach had a terrible year, as did GameStop, Discovery Communications and Amazon.

Industrials: Airlines were the big winner in this corner of the market as their fuel costs plunged along with the price of oil. Southwest Airlines and Delta Air Lines had the biggest gains, followed by General Dynamics, an aerospace and defense company. This year’s gain: 9 percent.

Materials: Sharp drops in prices for commodities such as copper, silver and oil led to a weak showing for this group, especially mining companies. The sector rose just 5 percent during the year, held back by losses in big names such as Freeport-McMoRan, which tanked 38 percent.

Telecommunications: Cutthroat competition for wireless customers meant a rough time for major phone companies like Verizon Communications and AT&T, both of which ended the year down slightly. The overall sector, which has a few other names such as CenturyLink but is dominated by the two bellwethers, ended down 1 percent.

Energy: To see why this sector had the worst performance in the market, a loss of 9 percent, look no further than the price of oil. Benchmark U.S. crude dropped by 50 percent in the second half of the year as abundant supplies of oil outstripped global demand.