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Investors lose confidence in industrial stocks

Yahoo Finance's Brian Sozzi takes a look at investor confidence in the industrial & materials sector.

Video Transcript

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JULIE HYMAN: It's time to let you know what particular stories that you may have missed. Soz and I are watching today. And Brian, you're looking at some a handful of stocks-- or maybe more, I actually don't know-- you're going to tell me that investors have lost confidence in. That's all I know tell me more.

BRIAN SOZZI: Four handfuls of stocks, really. We're only bringing the big guns here on Yahoo Finance. But yes, I'm locked and loaded on industrial and material stocks and really digesting some interesting new research out of the folks over at Sundial Capital Research. I have a story on this now in the Yahoo Finance platform. But they are noting industrial stocks have fallen almost 7% since August 16, and material stocks that have fallen close to 8% since August 16.

And the way I phrased it in the story-- investors have lost complete confidence in these industrial. Stocks very interesting to see here. During the same time span, going back to August 16, the S&P 500 is roughly flat. So you're seeing industrials and materials really underperform the broader market here.

A couple of stats here Sundial brings up-- the percentage of industrial stocks holding above their 50-day moving average-- again, that is a key measure of market sentiment-- has plunged below 20%. That is a level not seen since the height of the COVID-19 pandemic earlier in 2020.

And then, also, fewer than 60% of industrial stocks closed above their 200-day moving average earlier this week-- again, Julie, indicating a real loss of confidence in these industrial and material stocks.

And why is it happening? Really, you're getting slowing growth across the globe. The US, China, and industrial stocks historically do well at the start of an economic cycle.

JULIE HYMAN: Interesting. So we'll see, though, if people will come back into some of these stocks here. I did notice that industrials, for example, was one of the groups that was leading some of the gains yesterday, although obviously we are talking about a longer-term trend here when we talk about what's going on with the industrialss.