While domestic equity indexes have seen only small movements in price over recent months, large sector shifts have been occurring beneath the surface. These shifts resulted in a surge in Value stock performance and a selloff across Growth stocks.
In this week’s Market Note, we highlight recent notable sector performance disparity. Top performing sectors of the past three years such as Technology and Telecommunications have seen muted returns, while certain longer-term underperforming sectors such as Consumer Staples, Energy, and Materials outperformed the index by a large margin. It seems that fears around AI innovation and the creative destruction that may result is contributing to changing investor sentiment. Investors have arguably moved away from a growth at any price mentality to a focus on companies with profitability, cash generation, and business models that are more durable to AI innovation. This has been referred to as the “HALO” trade—movement of funds into Heavy Assets Low Obsolescence stocks.
The Verus Market Note provides market commentary along with relevant charts and graphs. Each week, we highlight a key story from the finance world that we believe will pique your interest. While these insights are meant to inform and enrich your understanding of the current market landscape, they should not be taken as direct recommendations for immediate portfolio adjustments.