LIVE MARKETS-The song remains the same: Q3 sector performance

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

THE SONG REMAINS THE SAME: Q3 SECTOR PERFORMANCE

Investors are about to close the books on a robust third quarter - the best July-to-September performance for the S&P 500 since 2020 - a look at sector performance during that period paints a picture of continued market leadership by the usual suspects.

Three sectors outperformed the broader market over that time period; communication services .SPLRCL, technology .SPLRCT and consumer discretionary .SPLRCD. It's no coincidence that the "magnificent seven" megacap momentum stocks are all constituents of those sectors.

"It's still very much a risk-on mentality and a risk-on trade," Paul Nolte, senior wealth advisor & market strategist at Murphy & Sylvest tells Reuters. "If you take a look at what's been winning this year, what's been winning for the last five years, it's the group; I think around 80% of the earnings growth has come from those three sectors."

The chart below, which shows percentage change since June 30 closing levels through September 29 close, also shows defensive "value" sectors underperformed S&P 500, while "growth" stocks fared better than the benchmark index:

But what about that "leadership change" that analysts talk about when value stocks reassert themselves? And worries that some of these momentum stocks' elevated valuations?

"If you look at history, you get leadership changes usually around recessionary periods," Nolte adds. "A lot of comparisons have been made to 2000 and the bullish case would be, well, these are companies with real cash flow, real earnings, real sales."

However, Nolte says that past is not necessarily prologue.

It's possible, he says, that recent stock market performance is "building in too much of what may happen in the future and the expectations are that we're going to see clear skies."

"At some point, there will be a reckoning."

(Stephen Culp)

EARLIER ON LIVE MARKETS:

PRE-SHUTDOWN DATA DELUGE: JOLTS, CONSUMER CONFIDENCE, HOME PRICES, CHICAGO PMI CLICK HERE

THE SEPTEMBER EFFECT LOOKS LIKELY TO BLOW PAST WALL STREET THIS YEAR CLICK HERE

GOLDMAN SACHS SEES LOWER RISKS OF US RECESSION AS ECONOMY HOLDS UP CLICK HERE

TARIFFS TICKING UP CONSUMER PRICES SLOWLY VS 2018-19 EPISODE CLICK HERE

UK GDP: SIGNALS BENEATH THE SMOOTH SURFACE CLICK HERE

STOXX DIPS, FINANCIALS OUTPERFORM CLICK HERE

EUROPE BEFORE THE BELL: MUTED START AS Q3 WRAPS UP CLICK HERE

BONFIRE OF THE VANITIES CLICK HERE