Stock Market Charts from WSJ

Chart Clinic: In the financial market, charts are used extensively. I will take one article from The Wall Street Journal (WSJ), "Global Stocks Attract Investors After Covid-19 Vaccine Rollout" (Jan 6, 2021), to digest the meaning of the charts used. 
This article uses three charts: two bar charts (#barchart) and one area chart. 
The #1 area chart (#areachart) shows the sector selection in MSCI Emerging Market, MSCI Europe, and S&P 500 from 2010 to 2020. The tech sector is highlighted in black. We can see the tech section ratio increasing in the S&P500 in recent years. The ratio is comparable to the MSCI Emerging Market. We can find the 2020 percentage after moving the mouse on top of the section. Tech takes 27.61% in S&P 500, 20.48% in MSCI Emerging Market, and 7.62% in MSCI Europe. The article further explains us " (tech sector) contributed more than half of the S&P 500's 18% total returns last year. From the data, we can see the tech returns in the S&P 500 are under-performed than other sectors, taking 27.61% of the total selections with an 18% contribution to the total returns. 

The #2 bar chart (#barchart) displays the same data but using a bar chart. It doesn't show the changes over time but shows the current sector selection differences in MSCI Emerging Market, MSCI Europe, and S&P 500 from 2010 to 2020. 

The #3 bar chart presents the point in the article, "The S&P 500 ended 2020 trading at 22.68 times its projected earnings over the next 12 months, above a five-year average of 17.78, according to FactSet. The MSCI Emerging Markets index, by contrast, traded at 15.36 times forward earnings, while the MSCI Europe index traded at 17.10 times earnings, according to MSCI." The good part is that the chart uses a dotted line to indicate the average location to see the S&P forward P/E ratio above the average. 

As we discussed, the bar chart is great for comparison but not as good as the line/area chart to show the changes over time. The #2 and #3 bar chart confirms our viewpoint. 

In summary, when reading financial charts, we pay more attention to time, price, and significant indicators (such as average, top line, and bottom line).