Sector Relative Strength

Now that the market is beginning to price in a Fed in easing mode, we looked at sector relative strength to see if there have been any shifts in strength. On each chart, the first red circle denotes the cut in the Discount Rate on 8/17, while the second dot marks last week's cut (9/18) in both the Fed Funds and the Discount Rate.  Charts highlighted in red indicate that the sector has underperformed the market over the last year.

Since the Fed began cutting rates, three sectors have seen noticeable shifts in their performance.  Consumer Staples reversed their positive momentum while Industrials and Materials had positive reversals following short term weakness.  Consumer Discretionary and Financials are two sectors which investors initially had hoped would improve under an easing Fed.  However, after brief pops higher, both appear to have resumed their downward trend.