The sector remains a diverse exposure that has remained in the middle of the road as investors have rotated between Growth, Cyclical and Low Vol. exposures at different points in 2025.
It will be interesting to see if Discretionary stocks can build on near-term momentum without continuous support from the Fed. With equities making a new ATH in December, we are giving the sector the benefit of the doubt amidst the resilient bull trend for US equities.
The Staples sector remains in the weakest long-term performance trend off the April 2025 lows. We think the sector needs equities to correct at the index level in order to outperform.
The Healthcare sector retraced some gains in December, but the intermediate-term bullish reversal at the sector level remains intact supported by strong stock level participation. We think there’s more potential upside here.
Financials were the primary beneficiary of the Fed’s dovish policy move in December. Lower rates offer the prospect of expanding credit issuance and loan growth while relieving potential pressure on bank balance sheets.
Tech stocks led at the sector level in 2025. Profit taking since late October and near-term disinflationary signals set the sector up for success to start 2026.
Legacy media stocks were boosted by the Fed in December while Mega Cap heavyweights saw profit taking. We think those Mega Caps will be accumulated sooner than later if interest rates stay contained.
Utilities were a victim of risk on rotation in December. With inflation easing we expect equities to start 2026 on positive footing which has us out of Utilities stocks for January.
Real Estate stocks have generally worked best during bull trends since the pandemic impaired the Office REIT industry.
December 31, 2025 Sector performance in 2025 was defined by an unusual combination of disinflation, resilient economic growth, shifting policy expectations, and the maturation of
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