The pieces of the next bull market are starting to come together: Morning Brief

U.S. stocks fell on Wednesday, likely raising concerns that the bear market won’t come to an end anytime soon. But certain sectors have out-performed the broader market and caught investors’ eyes.

Check out the performance of the S&P 500 sectors since the broader market bottomed in mid-October.

S&P 500 Sector Performance
S&P 500 Sector Performance

Cyclical and value sectors dominate the top spots, as industrials and materials surge higher — both sectors up about 14%. Financials and energy — the only sector up year-to-date — follow close behind. Each are up more than 10%.

Peering inside the top sectors, the stronger names bottomed over the summer. As the broader market was making new recent lows, many of these stocks held their ground and even rallied.

Related:  Dow futures fall 200 points as the British pound hits record low against the dollar
Industrial and Materials Stocks
Industrial and Materials Stocks

Materials stock Freeport (FCX) leads this group, having managed to easily surpass recent highs and climb into June price territory. Caterpillar (CAT) — up 30% over the last month — is knocking on its all-time high from mid-2021. Even beleaguered Boeing (BA) surpassed its August high over the last few days.

The remaining sector out-performers — tech, real estate, and utilities — all are up over 9% in the last month. Much of the tech gains can be found in semiconductors, and to a lesser degree, software.

Semiconductor Industry Stocks - 1 Month Returns
Semiconductor Industry Stocks – 1 Month Returns

Warren Buffett’s Berkshire Hathaway (BRK-ABRK-B) just dipped its toe into chips, buying Taiwan Semiconductor (TSM) in the third quarter. When a big value investor decides it’s time to load up on a highly cyclical growth name in the semiconductor sector, investors take notice.

Related:  Stock futures slip as U.S.-China tensions simmer over Pelosi’s expected trip to Taiwan

Nobody knows what the next few weeks will bring, but the pieces of the next bull market are starting to align — and it’s time for investors to pay attention.

Leave a Comment