From Financial Modeling Prep: 2025-05-05 02:51:00

As U.S. economic growth slows, investors turn to sector selection for protection. Jefferies uses historical data to identify sectors that thrive in sub-trend GDP growth, revealing outperformers and underperformers.

Health care shines in sluggish economies, delivering strong returns during low-growth years. Despite short-term underperformance, the sector’s P/E ratio remains competitive, signaling long-term upside potential.

Consumer staples and discretionary sectors offer defensive plays in soft growth environments. History shows these sectors tend to fare well during contractionary periods, highlighting the importance of defensiveness and selectivity in consumer names.

Energy and communication services lag in a slowing economy, facing significant declines and weak earnings outlooks. These sectors are tied to macro-sensitive inputs and show negative momentum in recent performance data.

Small-cap earnings expectations take a hit in 2025, with utilities and tech trading at high valuations. Financials and industrials offer better valuation opportunities, with more reasonable pricing compared to richly valued defensives.

In a market with muted growth, sector positioning is crucial. Health care remains strong, while staples and discretionary offer select opportunities. Energy and communication services face headwinds, requiring caution in portfolio decisions based on historical data and real-time metrics.



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