Cumulative Total Returns Since Pre-Recession Peak
Dig Deeper to Uncover Potential Value
The U.S. stock market has soared since the end of the global financial crisis, matching its prior peak in 2012 and more than doubling since then. But not all areas of the market have reached elevated heights at the same time. The stunning gains of a number of the largest technology and consumer discretionary companies, such as Alphabet, Amazon, Apple and Facebook, have gotten much attention and can be partly justified by dominant competitive positions and robust growth rates.
Financials recently reached its prerecession peak after 10 years and energy has returned to 2007 levels. The global financial crisis generally hit financials stocks the hardest, and the sector declined nearly 80% following its peak in May 2007. Given the sector’s slower recovery, it may still have more room to run. Further Fed rate hikes could provide another boost to the industry. With respect to both financials and energy, select companies are likely to fare better than others, so fundamental research will be key to identifying potential winners.