The Odd Couple Of 2026: Cyclicals And Defensives

Russ Koesterich, CFA3.63K FollowersFollow5ShareSavePlay(4min)CommentsSummaryInvestors are rotating away from tech and into cyclical and defensive sectors like energy, materials, industrials, staples and utilities – all of which are outperforming their high-flying tech peers year-to-date.The knock-on effect of this trade can also be seen among style factors, with value easily outperforming both growth and quality over the same time period.Interestingly, earnings momentum for tech stocks in particular remains largely unchanged.While current economic data support staying invested in cyclicals, I recommend keeping an eye on these indicators, specifically labor market trends. Koonsiri Boonnak/iStock via Getty Images Those of us over 40 or 50 can probably still sing, at least in our heads, some of the songs from Sesame Street.

One Sesame Street jingle that describes this year’s financial markets: "This article was written byRuss Koesterich, CFA3.63K FollowersFollowRuss Koesterich, CFA, JD, Managing Director and portfolio manager for BlackRock’s Global Allocation Fund, is a member of the Global Allocation team within BlackRock's Multi-Asset Strategies Group. He serves as a member of BlackRock's Americas Executive Committee. Mr. Koesterich's service with the firm dates back to 2005, including his years with Barclays Global Investors (BGI), which merged with BlackRock in 2009. He joined the BlackRock Global Allocation team in 2016 as Head of Asset Allocation and was named a portfolio manager of the Fund in 2017. Previously, he was BlackRock's Global Chief Investment Strategist and Chairman of the Investment Committee for the Model Portfolio Solutions business, and formerly served as the Global Head of Investment Strategy for scientific active equities and as senior portfolio manager in the US Market Neutral Group. Prior to joining BGI, Mr. Koesterich was the Chief North American Strategist at State Street Bank and Trust. He began his investment career at Instinet Research Partners where he occupied several positions in research, including Director of Investment Strategy for both U.S. and European research, and Equity Analyst. He is a frequent contributor to financials news media and the author of two books, including his most recent "The Ten Trillion Dollar Gamble."Mr. Koesterich earned a BA in history from Brandeis University, a JD from Boston College and an MBA from Columbia University. He is a CFA Charterholder.