Summer is an interesting season for the stock market because we often see individuals putting their portfolio on the back-burner, opting to instead dedicate their focus on vacation, or spending time with family and friends. When it comes to the market, the number of participants determines how accurate prices are. Although Fort Pitt is committed to long-term performance, it’s always interesting to see how specific seasons impact the market and various sectors.
Technology has been a huge favorite as we head into the summer season. I believe this sector should continue to perform well this season, which is an anomaly. Generally, people who buy and sell tech products go on vacation during the second and third quarter each year, so revenues don’t typically grow as fast as other times of the year. Given the strength that tech stocks have had so far this year, it looks like it should continue to perform well throughout the summer and into the fall.
Another area that may perform well is industrials. Just like tech stocks, industrials usually perform a little softer in the summer months because customers and salespeople are on vacation, which makes it a seasonally weak period. But since they’ve been a winner over the past few months, I believe they should continue on that path of success.
Lastly, consumer discretionary should boom this summer. If the jobs numbers stay strong, the sector should continue to perform well. Also, after 10 years, fashion is beginning to drastically change for women. For a while, fashion was made up of flowing tops and skinny pants. Retailers like Urban Outfitters are reporting strong growth in sales because early adopters are gravitating toward clothing that includes loose fitting and flowing pants and slightly more conformed shirts. This sector should continue to gain momentum, especially as people prepare to go back to school.
The shift in these sectors performing well during a season that typically brings them into a lull, is exactly why long-term investors should stay invested throughout the year. Anything can happen!