Cyclical stocks have rallied sharply in recent weeks, outperforming Defensives for a record 14-straight sessions before pulling back, according to Goldman Sachs.
But despite the rebound and growing economic optimism among investors, Goldman says markets are still not fully pricing in a stronger growth outlook for 2026.
Goldman’s internal equity rotations and cross-asset signals suggest markets are effectively pricing about 2.0% real GDP growth next year, in line with consensus forecasts but below Goldman’s 2.5% estimate. Within cyclicals, consumer stocks and companies tied to nonresidential construction stand out as laggards relative to what would typically be expected if investors were fully discounting faster growth.
Goldman highlights a screen of stocks with exposure to nonresidential construction, noting that Ground Transportation and Building Products account for more than half of the group — sectors that could see catch-up performance if the market begins to price a stronger economic acceleration.
Steel Dynamics, Inc. (STLD) — YTD total return 53%
Commercial Metals Company (CMC) — YTD total return 46%
Nucor Corporation (NUE) — YTD total return 45%
Analog Devices, Inc. (ADI) — YTD total return 36%
Armstrong World Industries, Inc. (AWI) — YTD total return 34%
Zurn Elkay Water Solutions Corporation (ZWS) — YTD total return 29%
Norfolk Southern Corporation (NSC) — YTD total return 28%
Allegion Public Limited Company (ALLE) — YTD total return 27%
Microchip Technology Incorporated (MCHP) — YTD total return 24%
CSX Corporation (CSX) — YTD total return 17%
XPO, Inc. (XPO) — YTD total return 14%
Core & Main, Inc. (CNM) — YTD total return 12%
Union Pacific Corporation (UNP) — YTD total return 6%
Canadian Pacific Kansas City Limited (CP) — YTD total return 5%
Jacobs Solutions Inc. (J) — YTD total return 4%
A. O. Smith Corporation (AOS) — YTD total return 3%
Graco Inc. (GGG) — YTD total return 1%
Stanley Black & Decker, Inc. (SWK) — YTD total return 0%
Canadian National Railway Company (CNI) — YTD total return -1%
AECOM (ACM) — YTD total return -6%
Honeywell International Inc. (HON) — YTD total return -7%
Carlisle Companies Incorporated (CSL) — YTD total return -8%
Old Dominion Freight Line, Inc. (ODFL) — YTD total return -9%
Axalta Coating Systems Ltd. (AXTA) — YTD total return -11%
PPG Industries, Inc. (PPG) — YTD total return -12%
Lennox International Inc. (LII) — YTD total return -15%
Carrier Global Corp. (CARR) — YTD total return -20%
TFI International Inc. (TFII) — YTD total return -23%
Saia, Inc. (SAIA) — YTD total return -25%