Leaders-Laggards

Multiple higher than expected inflation readings coupled with a strong rebound in retail sales has investors thinking about the Fed again and that’s traditionally been bearish for stocks. Cyclicals are very mixed at the moment, but industrials are the one group buying into some of the reflation activity we’re seeing here. Tech has been one of 2023’s unquestioned market leaders, but it looks like the run may be starting to fizzle out.

Communication services staged a big reversal after a very strong start to 2023. Its growth sector peers had a pretty tough time last week, but tech managed to hold on nicely. Office REITs are in a tough spot, but rental rates remain high enough that REITs, in general, can still generate substantial income.

Facebook looks like an early contender for the comeback story of 2023 after beating Q4 earnings expectations and announcing a big share buyback. Tech has quickly become red hot as investors begin to shun cyclicals and pivot almost entirely into growth sectors. The power of the current growth rally is perhaps no more evident in any area of the market than here.