Financial stocks should benefit from phenomenal employment trends as well as rising rates. Yet the Financial Select Sector SPDR (NYSE:XLF) is down roughly 12% from a 2018 high and down nearly 5% year-to-date.
Cyclical stocks should excel in a strong economic environment. Nevertheless, the iShares Transportation Average ETF (NYSE:IYT) is down approximately 11% from its 2018 peak and down 3.5% this year.
At present, there are only three economic sectors that boast technical uptrends. Consumer staples, utilities and healthcare. In essence, investors have shifted to a decidedly defensive stance, in spite of the reality that few economists see recession risks.