Two Thoughts on Today’s Trade

7.8.25

Rotation from Leaders to Laggards

Three of the worst-performing sectors YTD are showing strength today. The rotation from leader to laggard doesn’t often have legs. However, if it persists, then we’ll inevitably start talking about a broader rotation. That said, I view days like these as investors taking profits before positive seasonality fades in August. But, they still want to stay invested. So, they’re value-shopping in the laggards column.

Distinguished Leadership

The only two YTD-leading sectors gaining today are Industrials and Technology. To me, that suggests a more durable bid for exposure to these names. Even in a rotation from winners to losers, investors don’t want to part ways — and are, in fact, continuing to allocate — toward areas of the economy where earnings narratives tend to be cleanest.

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