There’s an interesting study published by Visual Capitalist on the performance of the S&P500 sectors over the business cycle, in terms of the gdp. It’s difficult to use this chart as a template for the current market, because there are nuances that affect certain sectors, such as remote working for the real estate sector, or the BTFP for the banking industry after years of zero interet rates, but paraphrasing Mark Twain, we can still try to find the rhyme with prior cycles. If we do that, by looking at the Tech and Industrial sectors, we might find the most similarities with Recovery or Expansion periods, while at the same time debating the possibility of a recession or slowdown due to the #ratehikes. Healthcare and utilities are signaling a slowdown, and consumer staples and Energy are probably at a tipping point as well. The key sector to watch is probably Technology, since it’s the biggest one in terms of weight and the best performer. It will provide the key to understand what part of the cycle we are in.
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