For some stock sectors, the ‘correction’ is already here

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Even counting last Thursday’s slump, the U.S. stock market as a whole hasn’t given much ground since the big rally began on March 10 -- frustrating sidelined investors who’ve been hoping for a pullback.

But under the surface there has been plenty of bloodletting among industry sectors and individual stocks over the last month or more. If buyers are still interested (a big if, it seems), they can already find a lot of issues marked down from their spring highs.

Though the Standard & Poor’s 500 index was off just 5.3% through Thursday from its spring closing peak of 946.21 reached on June 12, four of the 10 main industry sectors in the index already are in ‘correction’ mode, meaning they’re down at least 10% from their highs.

The biggest loser among the 10 sectors: financial stocks, which had led the rebound from the market’s winter low. The S&P 500 finance sub-index was down 12.7% through Thursday from its spring peak reached May 8.

More surprising, perhaps, is how much energy stocks have been hit since topping out in mid-June. The S&P energy sub-index was off 12.5% through Thursday from its June 11 high. Crude oil futures, which also peaked June 11, were down 8.2% through Thursday, to $66.73 a barrel.

The other two S&P sectors down more than 10% from their spring highs: materials, off 11.5%, and industrials, off 10.2%. The softness in those stocks suggests doubts about how soon the recession will end. In the industrial group, General Electric, at $11.46 on Thursday, was down 21% from its May 8 high of $14.53. (GE, of course, also has a huge financial business.) Farm machinery giant Deere & Co. has fallen 18% since May 6, to $38.53.

At the other end of the spectrum, the S&P sectors that have held up the best so far are consumer staples, off just 2.9% through Thursday from their spring high reached June 2; health care, off 3% since peaking on June 29; and technology, also off 3% from its high set on June 11.

Consumer staples (toiletries, packaged foods, etc.) and health care are considered classic ‘defensive’ sectors, meaning places to hide in a lousy economy. Technology’s relative strength, by contrast, signals that investors are counting on tech firms to lead the way if the economy is on the verge of reviving -- a view that will be tested soon by second-quarter earnings reports.

-- Tom Petruno