Image showing the business cycle and traditional best performing sectors during each of the four stages of the business cycle. Early cycle (trough) traditional best performers: Consumer Discretionary, Financials, Industrials, Materials, Real Estate. Mid cycle (advance) traditional best performers: Communication Services, Consumer Discretionary, Industrials, Information Technology. Late cycle (peak) traditional best performers: Consumer Staples, Energy, Health Care, Utilities. Recession (decline) traditional best performers: Consumer Staples, Health Care, Utilities.
Source: Wells Fargo Investment Institute, as of December 31, 2023. Past performance is no guarantee of future results. Traditional best performers are based on the performance of S&P 500 Index sectors during a particular point in the economic cycle (early, mid, late, recession) since September 1989, the inception date for the S&P 500 sector indexes.
Key Takeaways
- The business cycle can help inform the investing decision process.
- We have positioned portfolios more defensively in anticipation of a slowing economy. However, we will look for opportunities to tilt more cyclically in preparation for an economic recovery we expect in the latter part of 2024.