The year-to-date rally in the US stock market has lifted all the major equity sectors, based on a set of ETFs. Leading the field: shares in the industrials sector, which has a sizable performance edge over the rest of the market.

Industrial Select Sector SPDR (XLI) has climbed a strong 16.5% year to date through yesterday’s close (Feb. 13). The ETF’s performance enjoys a moderate premium over the second-best sector return so far in 2019, currently held by energy shares. Energy Select Sector SPDR (XLE) is up 13.1% year to date.

The weakest sector performance in 2019: utilities. Shares in this corner of the market are ahead by a relatively soft 5.1%, based on Utilities Select Sector SPDR (XLU).

The stock market overall is posting a strong rally so far this year: SPDR S&P 500 (SPY) is up 10.0%, as of Wednesday’s close – the highest since Dec. 3.

One narrative said to be lifting stocks lately: renewed hope that the US and China will find a solution to the trade dispute. CNBC reports:

President Donald Trump suggested Tuesday that he might be open to postponing the current deadline of early March so that both sides can reach a deal.

“Markets always assumed the March 1 trade deadline was flexible, but this just confirmed it,” Tom Essaye, founder of The Sevens Report, wrote in a note. “Bottom line, the fundamentals are roughly balanced right now as there is optimism that a trade deal will get done.”

“Looking ahead, a trade deal could reduce concerns about growth and allow the 2019 rally to continue,” Essaye added.

Another bullish factor for stocks: expectations that the Federal Reserve will leave interest rates unchanged for the near term. Fed funds futures are pricing in high odds that the central bank will remain on pause for monetary policy for the rest of the year, based on CME data.

“It’s possible to sustain this momentum, as we still see factors in the backdrop that remain fertile like modest inflation, continued economic growth, and a healthy consumer,” advises Charalambos Pissouros, senior market analyst with JFD Brokers. “What we’re most concerned about is whether earnings growth can be sustained. That’s the real issue over the intermediate term.”

Indeed, Wall Street analysts have recently been warning of an “earnings recession.” According to data from FactSet, profits for S&P 500 companies are expected to slide by 1.7% on a year-over-year basis.

Perhaps, but so far the crowd’s inclined to emphasize the positive and so climbing a wall of worry is the prevailing trend.

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