How S&P disappointed investors in 2015

January 14, 2016

S&P was noticeably disappointing throughout the majority of last year finishing at a meagre 2044 (1 percent down from last year). Here are some of the reasons why this happened:

Why S&P didn’t flourish in 2015:

The commodities weakness:

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Energy and materials performed the worst for the index in 2015. The reasons aren’t hard to track if you read the market news throughout the year. The crude oil prices plunged through most of the year and it increased the pressure that persisted in the natural gas market which entailed more losses among all the energy stocks that are normally kissing the sky. The sector lost a total of 23 percent as an aftermath. The absolutely worst performer for the S&P 500 for 2015 was Chesapeake Energy. It endured a 77 percent loss and saw exceptional falls in the prices of smaller energy stocks that are not encompassed by the index.

Disappearance of the earnings growth:

There was an everlasting weakness in the profits at the corporate level and this has not been dealt with by the investors since 2009. During the second and third halves of the year, the index posted many declines in the earnings and it’s predicted by some prudent experts that towards the final quarter there are going to be even more declines (Note that the fourth quarter results will be shared in the beginning of the New Year). If we see a consistent 3 quarter earnings decline, this would have happened after 6 years.

New entrants:

New entrants often have interesting effects on the index and during 2015, there were some well-known stocks that were able to make it to the top 500. This is not something that we see every year.

While there were evident pitfalls, it is hoped (and not expected) that the fourth quarter might give good news to us.