Trader Talk

This Summer's Hot Trend Continues


This post was written by CNBC producer Robert Hum

The recovery trade continues today. Cyclicals are notably outperforming more defensive names once again, with the Morgan Stanley Cyclical Index is up 3 percent, while the Morgan Stanley Consumer Index is up just 0.75 percent.

This extends the recent trend that has taken place during the current summer rally. Since July 10, the Cyclical Index has risen an impressive 34 percent, although the Consumer Index has gained just 9 percent.

Particularly fueling the strength today amongst the cyclicals are commodity stocks like Freeport-McMoRan, Alcoa,AK Steel, Aluminum Corp of China, which are rising 4-6 percent. Their gains are partially helped by the strong overseas manufacturing data this morning and the weaker dollar which continues to fall midday.

Commodity Stocks

But the strength is more widespread, and isn’t just limited to materials and other energy stocks. Other industrials from transports including CSX, Union Pacific, Southwest Airlines to manufacturers like Caterpillar, Deere, Goodrich which are rising 3-4 percent midday.


On the flip side, defensive stocks continue to underperform, with healthcare, consumer, and telecom stocks remain flat to the downside today.

Take a look at the significant disparity between a diverse range of cyclical and defensive stocks since the summer rally began on July 10:


  • Masco up 63 percent
  • Goodyear Tire up 63 percent
  • Dow Chemical up 53 percent
  • Ford up 49 percent
  • Caterpillar up 49 percent
  • Ryder up 42 percent
  • Freeport-McMoRan up 38 percent
  • U.S. Steel up 37 percent
  • Alcoa up 35 percent
  • CSX up 30 percent



  • McDonald’s down 3 percent
  • Safeway down 2 percent
  • Abbott Laboratories down 2 percent
  • General Mills unchanged
  • Colgate-Palmolive up 1 percent
  • Coca-Cola up 2 percent
  • Wal-Mart up 5 percent
  • Procter & Gamble up 6 percent
  • Johnson & Johnson up 7 percent
  • Altria up 8 percent 

Defensive Stocks



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