Materials, Consumer Staples, Energy Push Market Higher

Below we have updated our charts of sector relative strength. In each chart, rising lines indicate periods where the sector is outperforming the S&P 500. Charts with red shading indicate that the sector has underperformed over the last year. Finally, in each chart we have also included red dots that highlight the five Fed rate cuts since August.

As the charts below illustrate, over the last year only three of ten S&P 500 sectors are underperforming the overall index (Consumer Discretionary, Financials, Telecom Services). As we have been noting over the last several weeks, while the economy is clearly slowing, sectors which typically lag during an economic downturn (Energy, Industrials, and Materials) are outperforming the S&P 500 by a wide margin.

On the other hand, defensive sectors such as Health Care, Telecom Services, and Utilities are all showing signs of relative weakness.

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