with virtually the same group of banks, and the number of recommendations for the safe-haven utilities and consumer staples sectors grew from the previous year.
“If the market’s going to trade higher, it’s going to be these cyclical sectors that are leading the charge,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, which has overweight ratings on financials, consumer discretionary and information technology. “Semiconductors are the spearhead of cyclical stocks,” he said. “They’re doing better, which once again tells us that there’s this positive backdrop from an economic standpoint.”Strategists recommending financials cited still-attractive valuations, strong bank dividends and expectations the Federal Reserve will hold off cutting interest rates in the near term, and that bond yields will rise.
Technology, which some analysts classify as a cyclical sector, remains a favourite. Areas such as cloud computing and “the internet of things” present long-term investment opportunities, said Nela Richardson, investment strategist at Edward Jones in St. Louis.The S&P 500 technology index, up more than 45 per cent year-to-date, has led sector gains so far this year, followed by the communication services index, up about 32 per cent, and financials, up about 29 per cent.