Graphic outlining the typical economic cycle:
Early cycle
Traditional best performers:
- Communication Services
- Consumer Discretionary
- Financials
- Industrials
- Materials
- Real Estate
Recent best performers:
- Consumer Discretionary
- Industrials
- Information Technology
Mid cycle
Traditional best performers:
- Communication Services
- Consumer Discretionary
- Industrials
- Information Technology
Recent best performers:
- Consumer Discretionary
- Financials
- Health Care
- Information Technology
Late cycle
Traditional best performers:
- Consumer Staples
- Energy
- Health Care
- Utilities
Recent best performers:
- Communication Services
- Consumer Discretionary
- Health Care
- Information Technology
- Utilities
Recession
Traditional best performers:
- Consumer Staples
- Health Care
- Utilities
Recent best performers:
- Consumer Discretionary
- Information Technology
Source: Wells Fargo Investment Institute, as of June 30, 2022. Past performance is no guarantee of future results. 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) either since September 1989, the inception date for the S&P 500 sector indexes (traditional best performers) or during the most recent full economic cycle, 2009–2020 (recent best performers).
Key Takeaways
- We favor increased emphasis on quality over cyclicals in our sector positioning and selectivity at the subindustry level.
- We currently favor the Information Technology, Energy, and Health Care sectors.