3 Worst-Performing Sectors: Which Stocks Are Dragging Returns During Debt Ceiling Crisis?

The U.S. stock market got off to a shaky start in May.

The S&P 500 index, closely tracked by the SPDR S&P 500 Trust ETF (ARCA: SPY), is poised to end its second consecutive week of losses for the first time since mid-February as the debt-limit stalemate weighed on sentiment.

As of May 12, all eleven S&P 500 sectors have fallen month to date, with some sectors failing more significantly than others:

• Energy Select Sector SPDR Fund (ARCA: XLE), down 7.3%
• Financial Select Sector SPDR Fund (ARCA: XLF), down 4%
• Materials Select Sector SPDR Fund (ARCA: XLB), down 3.7%.

Chart: Worst-Performing Sectors versus SPY - Month-To-Date Performance

Why Are Energy Stocks Falling In May?

• The fundamental cause for the energy sector's poor performance in May was the sudden drop in oil prices, rather than the Congress stalemate over the debt ceiling.
• Oil dropped 8.6% in the first two weeks in May, with a barrel of WTI-grade crude falling to $70.

Which Stocks Caused The Energy Sector's Drop? 

• Exxon Mobil Corp. (NYSE: XOM) sank 9.64% month to date, dragging the XLE down by 2% in May.
• Chevron Corp. (NYSE: CVX) fell 7.2% in May, pushing the sector ETF down by 1.5%.
• Marathon Petroleum Corp. (NYSE: MPC) plummeted 10.5% in May, driving the sector ETF down by 0.45%. 

Why Are Financial Stocks Falling In May?

• The crisis that hit smaller banks in March and led to the failure of Silicon Valley Bank, Signature Bank, and First Republic has left some scars on financial stocks.
• Concerns around the state of the economy and the debt ceiling standoff have also weighed on banking stocks' performances in May.
• The University of Michigan just reported a sharp drop in the preliminary estimates of consumer sentiment for May. Yhe Financial Select Sector SPDR Fund was among the worst performer for the day, only after the Consumer Discretionary Select Sector SPDR Fund (ARCA: XLY). 

Which Stocks Caused The Financials Sector's Drop? 

• PayPal Holdings, Inc. (NASDAQ: PYPL) was the worst contributor for the sector's performance, falling nearly 20% month to date, and pushing alone the XLF down by 0.5% in May.
• Bank of America Corp. (NYSE: BAC) plummeted 9% in May, dragging the sector ETF down by 0.4%.
• U.S. Bancorp (NYSE: USB) sank 15.4% in May, pushing the sector ETF down by 0.2%. 

Why Are Materials Stocks Falling In May?

• The main industry dragging the performance of the materials sector in May was metal and mining. 
• Excluding gold, growth-related metals fell across the board in May, with copper and silver both down by about 5% as the Chinese growth momentum weakened. 

Which Stocks Caused the Materials Sector's Fall?

• Freeport-McMoran, Inc. (NYSE: FCX) was the worst contributor for the sector's performance, tumbling nearly 10% month to date, and pushing alone the XLB down by 0.6%.
• The Mosaic Company (NYSE: MOS) cratered 22% in May, dragging the sector ETF down by 0.4%.
• Corteva Inc. (NYSE: CTVA) fell 8.4% in May, pushing the sector ETF down by 0.3%. 

Next: Debt Ceiling Deadlock Risks Default in June - Here's How The CBO Says Government Can Keep Operations Going Until The End Of July

Image: Pixabay