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As the ‘Trump trade’ fades, technology and consumer stocks are revealed as bargains

The U.S. stock market has been flipped on its head following Donald Trump’s surprise victory in November.

Equity investors need to look “under the hood” for changes among industries in the past three months. The S&P 500 Index’s SPX, +0.58% returns hide the fact that some sectors have done well at the expense of others. The financials ETF XLF, +1.37% is up 21%, trouncing the S&P 500’s return of 11%. Former favorites such as technology XLK, +0.31% and consumer staples XLP, +0.41% have underperformed, returning 10% and 4%, respectively.

Three months after the election, we can now see what the “Trump trade” consists of, and I believe the pendulum has swung too far in one direction, leading to a buying opportunity in mega-cap technology and consumer-staples stocks.

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