The Market Sectors Quietly Making Money in 2025

The Magnificent Seven – and everything else... Trump's tariff decision tomorrow... The job market remains 'frozen'... Labor data could sway the Fed...

---

There are two sides of this 'magnificent bear market'...

There's the Magnificent Seven, which indeed have endured a rough (and overdue) ride so far in 2025... down about 15% on average. Some are doing worse than others – Tesla (TSLA) is off 33%, while Meta Platforms (META) is flat.

And then there's almost everything else, including plenty of investments that are working just fine. For instance, as we discussed yesterday, insurance stock W.R. Berkley (WRB) just made a new all-time high, and gold posted its best quarter since 1986, up 18%.

But wait... You might say "U.S. stocks" also had their worst quarter since 2022 on tariff fears, as just about every mainstream financial-news outlet wrote yesterday. Well, not exactly, when you look just a little below the surface...

Remember, when people say "the market" or "U.S. stocks," they mean the benchmark S&P 500 Index. Because this index is weighted by market cap, the largest companies' moves have an outsized effect.

The benchmark market-cap-weighted S&P 500 dropped more than 4% in the first quarter. But the equal-weighted S&P 500 – the average performance of the index's 500 stocks, regardless of their size – is flat for the year.

Things look even "less bad" when you break it down by sector, as our colleague and DailyWealth Trader editor Chris Igou did for his subscribers today...

Seven sectors are up this year, while four are in the negative. Energy takes the top spot with a 9.3% gain. Health care stocks are second best, with a return of 6.1%. And the consumer-staples sector is in third with a 4.6% return.

The sector performing the worst is consumer discretionary, ringing in a 14% loss. Information technology is second worst, losing 12.8%.

You can see the full breakdown of sectors in the chart below...

Ryan Detrick, the chief market strategist at Carson Group, shared a similar take on social media platform X yesterday... "If you are diversified (and not all in tech or Mag 7) things aren't as bad as they tell you. Also, nearly all global markets are up [year to date]."

This is a telling observation...

To me (Corey McLaughlin), it shows notable market "rotation" toward typical "defensive" sectors like health care and consumer staples and/or inflation protectors like energy, as well as toward non-U.S. stocks. But it's not a full-fledged crash-type performance.

The same could be said by looking at our list of 52-week highs that we list at the bottom of our daily e-mail. Today, for instance, you can see the list is full of gold stocks that Stansberry Research editors have recommended.

(As a reminder... the 52-week highs are showing past performance. The editors tell their subscribers which of these recommendations remain active buys at today's prices.)

The tech-heavy Nasdaq Composite Index finished 0.8% higher, the S&P 500 was up 0.2%, and the Dow Jones Industrial Average and small-cap Russell 2000 Index were flat.

The thing is, though, the moves in the headline indexes like the market-cap-weighted S&P 500 and Nasdaq are exacerbated by the mega-cap Mag Seven, which are down double digits in most cases.

Everything felt fine when they were headed higher and the AI boom was the only thing most people wanted to talk about... but not so much now as sentiment has soured, trade-war headlines are dominating conversation, and recession concerns are growing.

A sector checkup...

Chris wrote about this today in his regular "sector checkup" segment for his DailyWealth Trader subscribers...

We shared last month how "risk on" sectors were taking a hit in January and February.

These are sectors that thrive in good times. And when a bull market is in full force, they usually lead the way higher.

But when the market hits a bump, they can fall harder than most other parts of the market. That has been true so far this year. And it became even more clear in March.

Chris also noted that nine of the 11 U.S. market sectors (all but energy and utilities) were down in March, but that – as we've also noted recently – he's seeing indicators of "oversold" conditions that he doesn't expect to last much longer. As Chris wrote about the different sectors' March 2025 performance...

Energy was the clear winner, up 3.8%. Utilities and health care took second and third with a 0.1% gain and a 1.9% loss.

Most of the losses were less than 5%. But communication services, information technology, and consumer discretionary were down much more. Take a look...

Consumer discretionary was down 9%, enough to be the worst performer. Information technology was close behind, down 8.9%. And communication services was down 8.4%.

You can see that the majority of losses for 2025 came last month. And risk-on sectors fell by a wider margin.

In fact, this is what you would expect in a downturn. The "risk off" sectors, like utilities, health care, and consumer staples, held up much better.

Now, this isn't going to last forever. In fact, we're seeing similar setups to the oversold conditions we saw in December... only this time, the riskier sectors are the ones due for a rally.

Existing DailyWealth Trader subscribers and Stansberry Alliance members can find Chris' full issue here, which also includes an analysis of one defensive sector that could be on the verge of taking another leg down before finding a bottom.

I bring all this up for two reasons...

First, the headlines and simple composition of the market indexes often obscure other trends.

And second, as you think about your portfolio right now, keep in mind the divergence between (most of) the Mag Seven and "everything else."

The bullish takeaway would be that things aren't as bad as they might seem... and that the latest market correction could be close to finished, if you don't think mega-cap tech stocks have more downside ahead of them in the short term.

On the other hand, the cautious view would be that new bearish catalysts could emerge – perhaps unforeseen escalation of tariff threats, or earnings-season surprises. Or if worsening economic indicators could suggest a recession afoot, sentiment could turn against the "rest" of the market... including the defensive sectors that are in the green so far this year.

One thing I do know... Chalk up the volatility to start 2025 as another reason why you want to be selective in your investments rather than going with the "crowd." Following the herd is a path to average results, which may feel fine to you while the market is up but presumably doesn't when it turns lower, which it inevitably does.

'Liberation Day' is tomorrow...

We will find out what that means regarding the next steps in President Donald Trump's tariff policies.

Some reports say that White House aides have drafted a proposal that would levy tariffs of roughly 20% on most imports, but that other options are on the table. This includes the original idea of "reciprocal" tariffs on trading partners.

Other reports, speculating on what's to come, have cited previous comments from Treasury Secretary Scott Bessent and Kevin Hassett, director of Trump's National Economic Council, who want to target about 10 to 15 specific countries making up the bulk of the U.S. trade deficit.

We will see what comes tomorrow. Today, the White House announced a 4 p.m. Eastern time press event for tomorrow, titled "Make America Wealthy Again," that will be held in the Rose Garden. That means we won't see related U.S. trading-day action until Thursday.

Anything that is perceived as less severe than expected could be a tailwind for the markets, though stiffer-than-expected import taxes or an unclear plan would likely stoke more volatility.

On this point and the pervasive "terrible headlines and sentiment" out there, Stansberry's Investment Advisory lead editor Whitney Tilson wrote in his free daily newsletter today...

My gut tells me that Trump doesn't want to begin his presidency by tipping an otherwise strong economy into a recession, so he'll declare some victories and back off a bit – which could trigger a huge relief rally.

Whitney added, "While I'm not outright bullish right now, I'm feeling more constructive than I was at the beginning of the year."

Turning to the labor market...

This morning, the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey ("JOLTS") gave us more evidence of what we've called a "frozen" jobs market.

In February, 7.6 million U.S. jobs were available. That's the fewest since last September... and slightly fewer than the month before.

However, job openings have been hanging around that level since about last August. And even with the big decline we've seen since job openings peaked at 12.1 million during the pandemic recovery, openings are still in line with the pre-COVID high in 2018.

According to the BLS, 5.4 million Americans got hired in February. Once again, that's a similar pace to January's. And separations – which includes things like folks getting laid off or quitting – were also virtually unchanged from January at 5.3 million.

But on a year-over-year basis, hires were down 268,000 and separations fell by 215,000. So hirings are falling, and so are separations. That means folks are going to be "stuck" holding on to their current jobs. As we wrote in a February Digest...

In other words, folks aren't losing their jobs... But if you're looking for a job, you're probably having trouble. Job openings last month dropped by nearly 560,000, and as we've previously reported, the average duration of unemployment has been rising.

That "wait time" was 21 weeks in February, according to the St. Louis Federal Reserve. So even with more job openings than at any point before the pandemic, it will still take an average of five months for folks to fill those positions.

And that's at a time when 42% of Americans don't have an emergency savings fund – let alone enough to cover five months without a paycheck.

More to come...

Today's job openings survey was just the start for labor-market data. Later this week, payroll processor ADP releases its employment survey for March, followed by the government's nonfarm payroll report for the same month.

Wall Street expects payroll gains to slow slightly to 139,000, down from 151,000 in February, but a steady unemployment rate at 4.1%.

Investors are going to watch any jobs data releases closely. Not only is it a sign of the overall economy's health – surging unemployment has preceded every recession since World War II – but it's also an important clue to where interest rates are headed.

"Maximum employment" is half of the Federal Reserve's dual mandate, along with "price stability." So any sustained weakness in the jobs market would force the Fed to act, no matter what is going on with inflation.

And with inflation stubbornly above the Fed's 2% target, the last thing the central bank wants to do is cut rates to support the economy while also fueling a second spike in inflation.

February's JOLTS data wasn't good or bad enough to sway the Fed. And we doubt any one-month data reading will take the central bank out of "wait and see" mode.

Right now, businesses aren't on a hiring spree. And we're keeping a close eye to see if this turns into a jump in layoffs and unemployment... That will tell us how the economy is doing overall and how the Fed could react.

New 52-week highs (as of 3/31/25): Agnico Eagle Mines (AEM), Alamos Gold (AGI), Alpha Architect 1-3 Month Box Fund (BOXX), Brown & Brown (BRO), CBOE Global Markets (CBOE), Cencora (COR), Franco-Nevada (FNV), VanEck Gold Miners Fund (GDX), SPDR Gold Shares (GLD), Kinross Gold (KGC), Altria (MO), Sprott Physical Gold Trust (PHYS), Royal Gold (RGLD), Republic Services (RSG), Torex Gold Resources (TORXF), Tradeweb Markets (TW), ProShares Ultra Gold (UGL), Vanguard Short-Term Inflation-Protected Securities (VTIP), and Wheaton Precious Metals (WPM).

A rare quiet mailbag... As always, let us know your thoughts and send questions to feedback@stansberryresearch.com.

All the best,

Corey McLaughlin with Nick Koziol
Baltimore, Maryland
April 1, 2025