Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Are Consumer Staples The New Sector Leader For Equities?

By James PicernoStock MarketsMar 30, 2021 07:44AM ET
www.investing.com/analysis/are-consumer-staples-the-new-sector-leader-for-equities-200570282
Are Consumer Staples The New Sector Leader For Equities?
By James Picerno   |  Mar 30, 2021 07:44AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Last week we wondered if a change in sector leadership was brewing for US equities, based on a set of exchange traded funds. Among the leading candidates, we mused: Consumer Staples Select Sector SPDR® Fund (NYSE:XLP). The future’s still unclear (as always), but after XLP’s strong gain yesterday, building on last week’s solid rally, the possibility that staples are moving to the fore after posting lagging results remains an intriguing possibility.

Let’s start with a quick recap. Recall that just days ago, XLP was the worst-performing sector on a year-to-date basis (through Mar. 23). At the time, The Capital Spector noted that “the sector laggards are stirring, hinting at the possibility of a shift in leadership.”

Fast forward a week and a staples-led shift in leadership looks a bit more plausible after a sharp rally in these stocks in recent trading sessions through yesterday’s close (Mar. 29).

XLP’s rally is all the more impressive when you consider that that broad market has been mostly churning in a range lately. Meanwhile, the current year-to-date sector leaders – energy (XLE) and financials (XLF) – are modestly below their recent highs. XLP, by comparison, closed at yet another record high yesterday.

XLP Daily Chart
XLP Daily Chart

To be fair, the potential for a change in sector leadership also highlights utilities (XLU) and real estate investment trusts (XLRE), which have also been relatively strong lately. For some perspective, here’s how a select group of sector performances stack up over the past month. Note that utilities (XLU), consumer staples (XLP) and real estate (XLRE) are in the lead while the formerly sizzling energy (XLE) and tech (XLK) sectors have cooled.

XLU Daily Chart
XLU Daily Chart

Yes, it could be noise. A few days or weeks hardly makes a trend. Indeed, on a year-to-date basis, energy and financials are still firmly in the lead while XLP is lagging the broad market (SPY).

ETF Performance YTD Returns
ETF Performance YTD Returns

But as Barron’s notes, expectations for higher inflation are starting to change minds about which slices of the stock market may fare better.

Defensive sectors, themes and stocks generally hold up better as markets get worried about rising rates and other threats to corporate profits. Traditional defensive sectors like consumer staples and utilities may not cut it, though. Both sectors are underperforming the broader market this year. Healthcare is also lagging.

It’s premature to assume that the rebound in energy and financials has run out of road, or that tech’s leadership has faded for the foreseeable future. But if we’re at a turning point, we may see the signs in the days ahead. Watch this space.

Are Consumer Staples The New Sector Leader For Equities?
 

Related Articles

Are Consumer Staples The New Sector Leader For Equities?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email