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logoArgusJune 09, 2023

Daily Spotlight: Argus Adjusts Sector Ratings

Market Outlook
Bearish - Short term

We have adjusted our recommended sector allocations this month. The following reflects our guidance for the calendar third quarter of 2023. We have raised Consumer Discretionary to Over-Weight from Market-Weight. Employment remains high, and wages are still rising. Consumers are still taking over-due vacations, benefiting leisure, hospitality, gaming and restaurants. We have raised Communication Services to Market-Weight from Under-Weight. Social media stocks such as Meta and Alphabet, which struggled in 2022, are now riding the AI wave. We have lowered Industrials to Market-Weight from Over-Weight. In a high-interest-rate environment, enterprise demand for industrial solutions has softened and may take some time to recover. Lastly, we have lowered Energy to Under-Weight from Market-Weight. Petroleum prices have come down from peak due to slow recovery in China from COVID lockdowns and widespread development of renewable resources. Energy earnings are expected to decline sharply in 2023. Our rebalancing process takes place four times a year, early in the months of March, June, September and December. Our current Over-Weight sectors are now Basic Materials, Financial Services, Consumer Discretionary, and Technology. Our current Market-Weight sectors are Communication Services, Industrials, Healthcare, Real Estate, and Utilities. Our Under-Weight sectors are Energy and Consumer Staples. Argus Research suggests that advisors and investors leverage this consistent and comprehensive process to adjust sector weightings within diversified equity portfolios.

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