Leaders-Laggards

With the October jobs report fueling hopes that a recession might be further off than we think, cyclicals outperformed in a major way. Healthcare is approaching its COVID peak relative to the broader market. Very quietly, consumer staples are developing a nice little uptrend here.

The overall pace of outperformance is moderating, but the cyclical trade is still looking pretty healthy here. Defensive sectors got a bit of a surprise in terms of outperforming the market, but I suspect this week’s Fed announcement could halt short-term progress. Defensive sectors aren’t giving up here.

Energy stocks were again the market’s top performing sector last week despite some pressures on oil prices. Defensive sectors across the board were significant underperformers last week and this group was not spared. The next few weeks for staples stocks could be a referendum on the health of the consumer.