Telecom is Having a Bad Day…Or Is It?

As I write, telecom is the worst performing sector in an S&P 500 has been running in place. That seemed odd to me considering that utilities, another defensive, big-dividend-paying sector, is the best performer in the S&P. It turns out, however, that telecoms aren’t doing as badly as the might seem.

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Consider: The S&P 500 telecom sector has dropped 0.3% at 12:53 p.m., even as the S&P 500 has gained 0.1% and the S&P 500 utilities sector has advanced 0.1%. But telecom is a weird grouping. For starters, there are just five telecom stocks in the S&P 500: Verizon (VZ), AT&T (T), CenturyLink (CTL), Frontier Communications (FTR) and Windstream Holdings (WIN).

And of those, just two matter: Verizon and AT&T. That’s because those two have market caps of $202.5 billion and $184 billion, respectively, while CenturyLink, Frontier Communications and Windstream Holdings have market caps of $20.7 billion, $5.8 billion and $6 billion–or 8% of the index market cap.

That matters on a day like today where the telecom sector looks like it’s having a bad day, but in reality, it’s doing quite well. In fact, four of the five stocks in the sector are up on the day. Windstream has gained 0.9% to $9.95, Frontier Communications has advanced 1.2% to $5.80 and CenturyLink has risen 1.2% to $36.20. But Verizon has dropped 0.9% to $48.89 and AT&T has ticked up just 0.1% to $35.45. The end result: An index that is among the worst performers on the day–despite big gains in three components.