Energy, Industrials And Materials: The First Innings Of A Big Market Rotation

Leo Nelissen50.16K FollowersFollow5ShareSavePlay(16min)CommentsSummaryThe S&P 500 is undergoing a major rotation, with alpha shifting from big tech to energy, industrials, and materials.Capital flows, economic indicators, and AI-driven power demand are driving a regime change favoring cyclical, capex-intensive sectors.I remain bullish on energy, industrials, and basic materials, viewing them as the trifecta for generating alpha in the coming years.While volatility is expected, complementing S&P 500 exposure with these sectors enhances risk/reward as the market re-rates leadership. aristotoo/iStock via Getty Images Introduction This year, so far, has been quite something. While I'm writing this, the S&P 500 is basically flat on the year. That’s not a bad thing if we consider that the index returned 16% last year. In 2024, it returned 23%. In the year beforeThis article was written byLeo Nelissen50.16K FollowersFollowLeo Nelissen is a long-term investor and macro-focused strategist with a passion for dividend growth, high-quality compounders, and structural investment themes. He combines big-picture macro analysis with bottom-up stock research to identify durable businesses with strong cash-flow potential. Leo also writes for Main Street Alpha, where he publishes deeper-dive research and actionable investment ideas for long-term investors.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.