Financials Sector - Business Cycle

The Financial Sector contains companies involved in activities such as banking, mortgage finance, consumer finance, specialized finance, investment banking and brokerage, asset management and custody, corporate lending, insurance, financial investment, real estate investment trusts (REITs), as well as companies engaged in real estate management & development.

Business Cycle Analysis Provided by Fidelity Investments

Global Economy Continues to Mature Business Cycle Outlook

The table below shows how this sector has tended to perform in each stage of the business cycle. For more information on sector performance patterns, read The Business Cycle Approach to Sector Investing (PDF).

Sector Performance by Business Cycle Phase

Sector Early Mid Late Recession
Consistently OverperformConsistently Overperform Consistently UnderperformConsistently Underperform No clear patternNo Clear Pattern
OverperformOverperform UnderperformUnderperform

Unshaded (white) portions above suggest no clear pattern of over- or underperformance vs. broader U.S. equity market. Double +/- signs indicate that the sector is showing a consistent signal across all three metrics: full-phase average performance, median monthly difference, and cycle hit rate. A single +/- indicates a mixed or less consistent signal. Source: Fidelity Investments (AART).

The business cycle has four phases that reflect fluctuations in the economy, and each phase may have an effect on sector performance. This chart indicates the current business cycle of the U.S. economy based on Fidelity's analysis of historical trends.

INFLATIONARY PRESSURES / Red=High

Inflationary Pressures Key
Show business cycle details Early Mid Late Recession
Business cycle graph Relative Performance Gradient bar

RELATIVE PERFORMANCE OF ECONOMICALLY SENSITIVE ASSETS / Green=Strong

Note: This is a hypothetical illustration of a typical business cycle. There is not always a chronological progression in this order, and there have been cycles when the economy has skipped a phase or retraced an earlier one. Economically sensitive assets include stocks and high-yield corporate bonds, while less economically sensitive assets include Treasury bonds and cash. Please see the latest business cycle update for a complete discussion.

View business cycle analysis for all sectors.

Sectors and industries defined by Global Industry Classification Standards (GICS®).

Because of their narrow focus, sector funds tend to be more volatile than funds that diversify across many sectors and companies.

Past performance is no guarantee of future results.

Investment decisions should be based on an individual's own goals, time horizon, and tolerance for risk.