Hedge Funds Snap Up Cyclical Stocks Amid Tariff Concerns
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CEO Jonathan Caplis of PivotalPath observed that cyclical stock declines this year gave investors an opportunity to re-enter the market at reduced prices. Fund managers consider US financials together with traditional energy sectors to be less susceptible to tariff-related damage according to their analysis.
The KBW Bank Index experienced its longest winning streak since 2016 by increasing for eight days before the index declined on Wednesday because of tariff concerns. The Citigroup index which tracks cyclical stocks against defensive sectors including utilities health care and consumer staples has recovered half of its previous month's peak decline.
The ongoing performance of cyclical stocks indicates that some market participants expect the economic impact from tariffs to remain relatively minimal.
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