Consumer Cyclicals Lag Behind Broader Market Rally
JPMorgan believes a number of consumer-focused sectors could be positioned for a stronger second half of 2026 after a prolonged period of underperformance.
According to strategist Mislav Matejka, consumer cyclicals have been one of the few major market segments to miss out on this year’s rally. While banks have benefited from higher interest rates, industrial companies have been supported by infrastructure spending, and technology stocks have continued to gain from artificial intelligence-related demand, consumer-oriented sectors have struggled to keep pace.
Matejka noted that consumer cyclicals have consistently lagged since the sharp post-pandemic rebound, leaving valuations at relatively attractive levels.
Valuations and Sentiment Suggest Opportunity
JPMorgan highlighted that many consumer-related stocks are now trading near multi-year relative lows, while valuation metrics remain undemanding compared with broader equity markets.
At the same time, consumer confidence measures across many regions remain close to historic lows.
According to the bank, these conditions have often provided a favorable backdrop for future outperformance.
Matejka observed that consumer stocks have historically delivered strong returns when sentiment begins recovering from depressed levels.
Several Catalysts Could Support a Rebound
The bank identified a number of factors that could improve the outlook for consumer sectors over the coming months.
A reduction in geopolitical tensions could continue to weigh on energy prices, providing relief to households and improving disposable income.
Brent crude has already fallen approximately 25% quarter-over-quarter, a move JPMorgan believes should ease pressure on consumers while also reducing the need for central banks to maintain restrictive monetary policies.
The bank also pointed to lower tariff rates compared with earlier in the year, which could benefit consumer goods companies by reducing input costs and supporting demand.
In addition, upcoming U.S. midterm elections could increase the likelihood of consumer-focused fiscal support measures.
Luxury, Travel and Retail Among Top Picks
Looking ahead to the second half of the year, JPMorgan sees the most attractive opportunities in several consumer-facing industries.
The bank highlighted luxury goods, airlines, hotels, travel and leisure companies, and retail stocks as sectors that could benefit most from an improvement in consumer sentiment and spending activity.
These industries have been among the weakest performers in recent years and could be well positioned if macroeconomic conditions become more supportive.
Autos Remain a Relative Concern
While JPMorgan sees value emerging across much of the consumer universe, the bank remains more cautious on the automotive sector.
The analysts cited ongoing structural challenges facing automakers, which continue to temper their enthusiasm for the group.
However, the bank acknowledged that the sector’s recent underperformance has become increasingly pronounced, suggesting valuations may eventually begin to attract investor interest.