Housing markets as well as the labor markets are now showing signs of slow improvement and the fears of the domestic economy slipping into recession have subsided. Further many statements from the Euro-zone policymakers regarding their resolve to do “whatever it takes" to preserve the monetary union, have boosted the investor sentiment.

As a result, the market indexes are now near their highest levels in the last four years. The following table shows the sector-wise performance using the SPDR ETFs:

Technology sector is a big winner this year (thanks to Apple!), followed by consumer discretionary and financials.

Looking at the one -month returns, technology, financials, energy, industrial and consumer discretionary sectors outperformed the broader market. On the other hand defensive sectors like utilities, healthcare and consumer staples lagged behind.

Recent outperformance by the economically sensitive or so-called 'risk-on' sectors indicates that the investors are now willing to take on more risk. These sectors had underperformed the defensive sectors earlier when the fears of a global economic collapse had driven the investors to the ‘safer’ sectors.

However, there are still many factors that will keep the market volatile through the end of the year. Further, global economy is not improving substantially anytime soon. Thus, a sustainable rebound by the cyclical sectors appears to be in doubt.

Do you think that the cyclical sectors can continue their recent outperformance through the end of this year?