The Stock Market Reacts Negatively as Fed Raises Interest Rates; Oversold Sectors are Ready for a Bounce

The broadly followed S&P 500 index continued its slide and it is now below the February low:

spy.122018

The Fed’s comments in combination with rising fears of a global economic slowdown negatively impacted the credit markets, as well. The chart shows that the ratio of the 5-year and 2-year U.S. Treasury notes is below 1 now. This condition is referred to as inversion of the yield curve, which may signal that the risk of a recession is higher than previously thought:

inversion.122018.png

Almost all sectors show a negative performance for the last three months:

sectors_122018.jpg

Gold miners and utilities are holding up the best:

fsagx.122018.png

fsutx.122018.png

We think that highly oversold sectors, such as banking and energy services, are ready for a bear market rally:

fsrbx.122018.png

fsesx.122018.png

 

View fund rankings at FidelitySectorReport.com for more information.

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