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Cyclicals Fuel Recent Rally, But Defensive Names Rule Since Dow 11K

The Dow once again flirted with 11,000 this morning, coming within 2 points of that level. Of course, the index has crossed above and below 11,000 seemingly dozens of times already, but that last time the blue chip index closed above 11,000 was back on May 3, 2010. Yes, that’s even before the now infamous “flash crash” on May 6 and stocks’ downward spiral in May and June.

Since then, the markets hit multi-month lows in early July, before bouncing back in July and September. Since the July lows, the Dow and S&P are up 13% while the NASDAQ is up 14%. Fueling that rally have mostly been cyclical stocks: Some sector leaders since the market’s July lows: airlines up 26%, materials up 21%, retailers up 19%, industrials up 18%, gold stocks, and energy stocks up 16%.

But despite those double-digit gains, most cyclical sectors (outside of gold stocks and airlines) are still actually down since the Dow was last at these levels. Instead, the sectors posting gains since May have largely been defensive stocks like telecoms, utilities, consumer staples, and drug stocks. Also, posting a very strong performance amid a weakening dollar: agricultural and metal commodities.

Since the Dow Jones Industrial Average Last Close Above 11,000.



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