The recent outperformance of the Defensive sectors has been attributable to sharp increases in their relative P/Es. During the week of June 2, they rose to new highs for the year: Telecom Services (1.32, up from a low of 1.16 earlier this year), Consumer Staples (1.18 from 1.04), Utilities (1.08 from 0.94), and Health Care (0.96 from 0.84).
Meanwhile, among the Cyclical sectors, Energy edged up to 0.86. That’s still the lowest of the 10 sectors, and down from a high of 1.01 during the week of February 24. The second lowest sector is Financials at 0.87, which is the lowest this year, and down from 0.94 during the week of February 17. The highest among the Cyclicals in Consumer Discretionary at 1.16. It has been holding up remarkably well all year. The second highest among the Cyclicals is the Industrials sector, but it is down to 1.10, which is the lowest since November 18, 2010. Information Technology (0.98) is the cheapest since 1995.