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 September 30, 2021. Past performance is no guarantee of future results.
Key Takeaways
- We favor those sectors with earnings growth that should improve with economic growth.
- As a strong recovery continues, we favor certain cyclical sectors that tend to perform well early in a recovery.