Key Takeaway: Positive earnings surprises and upward revisions have been setting records. Expectations are now elevated, and economic data is falling short. Macro disappointments, lack of rally participation and widespread optimism could make for a bumpy ride for stocks into year-end.
With a handful of mega-caps driving index-level returns, we want to see sector-level leadership confirmed by similar sector strength on an equal-weight basis, as well as further down the capitalization scale.
Financials are the top-ranked sector in our rankings on both a cap-weight and equal-weight basis. Strength fades among mid-cap and small-cap Financials. Real Estate remains a leader across the board from a weighting and size perspective, though it has slipped on a short-term basis.
