To The Moon

Ever since the New York Stock Exchange opened its doors in 1792, the ups and downs of the US stock market have never stopped. Nowadays, it seems like the investment style in the US stock market is shifting again.

Although the $S&P 500(.SPX)$ has seen a recent pullback, the market cycle seems to be firmly in the upswing once again. The most obvious evidence is that investors are starting to sell off their Consumer staples and are getting excited about Cyclical stocks.

During bear markets, Consumer staples often become the target of market pursuit due to their defensive nature. For instance, for most of 2022, the performance of the Consumer staples sector ranked third among the 11 sectors of the S&P 500 index.

While some Consumer staples also fell, their declines were far less severe than those of tech giants like $Alphabet(GOOG)$ $Alphabet(GOOGL)$ , which dropped 35.2%, $Amazon.com(AMZN)$ ( -48.3%), $Tesla Motors(TSLA)$ ( -64.02%), and $Meta Platforms, Inc.(META)$ ( -64.4%).

But as the stock market rebounds in 2023, Consumer staples have become the third-worst performing sector. In March, investors poured nearly $100 billion into stock ETFs, with the largest inflows going to sectors like industrials, materials, and energy—the so-called cyclical investments.

Meanwhile, the largest outflows were from the highly defensive healthcare and Consumer staples sectors.

The strength of Cyclical stocks is closely related to the economic cycle. When the economy is booming, investors' risk appetite rises, and cyclical stocks thrive. The opposite is also true.