Sector rotation continues its way. As you can see in the chart below, over the last three months after NVDA results on July, the tech sector has become the laggard, and other sectors such as Utilities and Real Estate have taken the baton and have become the leaders of the S&P500. A huge tailwind for those sectors has been the decision from the Fed to lower interest rates and the market interpretation that rates will be significantly lower by December 2025. Having said that, are we talking about a real, long term rotation or is it just a temporary adjustment due to valuation differentials? How much can the Utilities sector grow its earnings as a whole compared to other sectors such as financials or even tech? Also, how come the healthcare sector, probably the most resilient one to the economic cycle, hasn’t participated of this current rotation?
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