Displaying items by tag: industrials
With the midterms finally over, investors need to think critically about how the market will respond. In particular, specific sectors will have different reactions. With that in mind here are six sectors to watch. Drugmakers seem likely to be seen favorably as the split between the parties means new regulation governing prices seems less likely. Banks could go either way, but most expect Trump’s deregulatory agenda to continue. Technology is looking less favorable as regulation and scrutiny of the sector is one of the few areas of bipartisan agreement. Industrials are looking less favorable as well, as the odds of a big infrastructure package have decreased. Energy seems neutral, as no big changes appear likely. Finally, marijuana stocks are likely to jump.
FINSUM: There is going to be quite a range of reactions over the next few months as each sector digests how the newly split Congress will affect them.
Okay, there is a trade war going on. But even still, industrial stocks look too cheap, at least according to Barron’s. The Industrial Select SPDR is up less than 2% this year, way behind the broader market because of fears the sector will get hammered by a trade war. Compounding that is the worry that the sector is past the peak of its cycle. However, the sector is still posting strong growth and good earnings. Stocks like Boeing and Caterpillar had big gains last year, but have weakened considerably recently. Recent earnings, though, were good, showing that core machinery sales continued the 15% annual growth they have been showing for several quarters. In seems the worst could be behind the sector.
FINSUM: It is too early to say whether the sector is out of the woods, but we would say that a 2% gain this year is not exactly what we would think of as the pre-condition for calling something very cheap.