Sector Momentum: Healthcare Leads at 12.5%

Defensives Anchor Sector Leadership

Defensive leadership holds the top of the sector table as of September 4, with nine of the eleven S&P 500 sector ETFs positive on 3M momentum and a 14.7-point spread from Healthcare XLV at 12.5% to the bottom at -2.2%. The median is 2.1%, which leaves most sectors well below the top trio. Breadth is positive, but the leadership mix stays defensive-leaning because the upper tier sits away from growth.

Healthcare XLV leads on level, and its -0.45 correlation to SPY gives the top rank an inverse market link. Energy XLE and Financials XLF occupy the same upper tier at 11.9% and 11.5%, and XLF is near a one-year high but losing pace. The top ranks blend defense, inflation sensitivity, and rates, which leaves sector strength diversified by theme but not led by growth beta.

Technology 3M Momentum Crossed Above Zero

Technology XLK turned positive at 4.0% after a +6.7pp jump, and its beta is 1.94, which gives the rebound nearly double market amplitude. Communication Services XLC and Consumer Discretionary XLY also turned positive at 0.6% and 0.2%. Three growth-sensitive sectors turned positive together, so the week's breadth expansion came from a sharp high-beta rebound with leadership one tier above it.

Real Estate XLRE turned negative at -0.9% (-2.9pp), entering a breakdown with a -0.59 correlation to SPY that marks an inverse link. Industrials XLI also broke down at 0.9% (-1.7pp) with a 0.57 beta that mutes market amplitude; Consumer Staples XLP eased to 2.1% (-1.7pp), Materials XLB holds 4.0%, and Utilities XLU trails at -2.2% after a 1.0pp rebound. Fresh growth sectors that turned positive alongside cyclical deterioration split the cross-section, which leaves sector breadth positive but the internal distribution uneven.

S&P 500 Sectors ETFs Heatmaps

S&P 500 Sectors ETFs: 3M Momentum

S&P 500 Sectors ETFs: 3M Correlation vs SPY

S&P 500 Sectors ETFs: 3M Beta vs SPY

Romain Gandon
CEO, Quantlake

Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Past performance is not indicative of future results.