2020 US sector outlooks

Fidelity's sector portfolio managers discuss their key investment themes, including 5G, industrial internet of things, batteries, renewable energy, and more.

Among the many factors that could drive US sector performance in 2020 and beyond are inflation, monetary policy, and valuations. Muted inflation has enabled the Federal Reserve (Fed) to enact multiple rate cuts in 2019. Such monetary easing by the Fed has historically improved banks' willingness to offer loans to consumers and thus should support lending in 2020. The Fed isn't the only central bank on an easing trajectory. A growing number of banks around the world are also cutting rates, which has often led global manufacturing indexes to rise, which may be an indicator of an impending recovery in manufacturing. Defensive sector valuations remain elevated relative to the broader market, while cyclical sectors are trading near their cheapest levels since the financial crisis.

These signals appear bullish for the stock market overall and suggest cyclical sectors may lead in 2020, according to Fidelity sector strategist Denise Chisholm. But not every stock within those sectors with strong outlooks will outperform, and there are opportunities to be uncovered in sectors that may appear out of favor. What matters most is trying to identify those individual companies that appear best positioned to deliver better-than-expected earnings growth or stock-price-multiple expansion over time.

Here, our sector portfolio managers share some of their highest-conviction investing ideas for the coming year to uncover some of the best thematic opportunities within their sectors in 2020. Some themes, such as the arrival of 5G technology, will likely span across the equity market, while others are more specific to certain sectors or industries. Click on any of the links below to explore our 2020 sector outlook.