New leadership for stocks: in with tech, energy, and banks, out with interest rate sensitive.
The market is rotating into new leadership as the facts on the ground have been changing. These trends have become especially notable in the past couple weeks:
- A change in investor expectations on interest rates is pushing bond yields higher, helping banks and hurting interest rate sensitive stocks, which had seen valuations move to unsustainable levels;
- Improving economic news helping cyclical stocks (the September ISM Non-Manufacturing Index saw its greatest one-month increase on record)
- An oil rally pushing Energy stocks higher, particularly exploration and production;
- A major semiconductor upcycle that is moving technology stocks higher.
Put it together, and we have new market leaders.