Key Highlights

  • Four sectors remain in Leading: Energy (XLE), Health Care (XLV), Materials (XLB) and Communication Services (XLC).
  • Energy remains the strongest leader: XLE gained 1.27%, recording the best daily performance among all eleven sectors.
  • Defensive sectors strengthen: Utilities (XLU), Real Estate (XLRE), Consumer Staples (XLP) and Financials (XLF) remain in Improving.
  • Technology remains in Weakening: XLK declined 1.53%, reinforcing its deteriorating relative momentum.
  • Industrials and Consumer Discretionary lag: XLI and XLY remain in the Lagging quadrant, reflecting continued relative weakness.
  • Only four sectors advanced: Energy, Utilities, Health Care and Consumer Staples recorded gains, while seven sectors declined.
  • Sector rotation remains active: Leadership is concentrated in four sectors, while four additional sectors are showing improving momentum.

The latest US sector momentum visualization for 1 September 2026 continues to show a rotational structure, with four sectors positioned in Leading, four in Improving, one in Weakening and two in Lagging. Energy, Health Care, Materials and Communication Services remain in the Leading quadrant, while Utilities, Real Estate, Consumer Staples and Financials continue to occupy Improving. Technology remains the only sector in Weakening, while Industrials and Consumer Discretionary stay in Lagging. The latest daily performance also shows a clear divergence between relative momentum and short-term returns, with several Leading sectors declining despite retaining stronger underlying relative strength.

Momentum Breakdown by Quadrant

US Sector Relative Momentum Chart (at the closing price of 02/09/2026). Powered by AmiBroker.

Leading: Energy, Health Care, Materials and Communication Services

Energy (XLE), Health Care (XLV), Materials (XLB) and Communication Services (XLC) remain positioned in the Leading quadrant. Energy continues to stand out as the strongest momentum leader and delivered the best daily performance, gaining 1.27%. This further reinforces its relative leadership profile.

Health Care also strengthened on the day, gaining 0.66%, while Materials declined 1.18% and Communication Services fell 0.52%. Despite the weaker daily performance of the latter two sectors, their positions in Leading indicate that their broader relative momentum remains stronger than the overall market.

The continued presence of four sectors in Leading suggests that the market still has an established leadership group, although the direction of their RRG trajectories will be important in determining whether this leadership can be sustained.

Improving: Utilities, Real Estate, Consumer Staples and Financials

Utilities (XLU), Real Estate (XLRE), Consumer Staples (XLP) and Financials (XLF) remain in the Improving quadrant. Utilities recorded a strong 0.78% gain, while Consumer Staples advanced 0.32%. Real Estate declined only 0.16%, whereas Financials fell 0.88%.

The combination of improving relative momentum and relatively resilient daily performance makes Utilities and Consumer Staples particularly notable within this quadrant. Continued movement toward the upper-right of the RRG would increase the probability of these sectors transitioning into Leading.

Real Estate and Financials require stronger price performance to confirm that their improving momentum is translating into sustained relative strength.

Weakening: Technology

Technology (XLK) remains the only sector positioned in the Weakening quadrant. The sector declined 1.53% during the latest session, making it the second-worst performer among the eleven sectors.

The position of Technology in Weakening is significant because it indicates that its relative momentum has deteriorated even as other sectors have maintained or improved their positions. A sustained period of underperformance could push XLK further toward Lagging.

For Technology to regain a Leading position, it would need to demonstrate sustained relative outperformance and a clear improvement in its RRG trajectory.

Lagging: Industrials and Consumer Discretionary

Industrials (XLI) and Consumer Discretionary (XLY) remain in the Lagging quadrant. Industrials declined 1.37%, while Consumer Discretionary recorded the largest sector decline at 1.72%.

The continued positioning of both sectors in Lagging indicates persistent relative weakness. Consumer Discretionary is particularly vulnerable after recording the weakest daily performance across all eleven sectors.

A sustained move back toward the centre of the RRG would provide the first indication that these sectors are beginning to recover. Until then, both remain among the weaker areas of the US Equity market.

Strategic Summary

The latest US sector momentum analysis continues to show four sectors in Leading, four in Improving, one in Weakening and two in Lagging. Energy remains the dominant momentum leader, supported by its 1.27% daily gain, while Health Care, Materials and Communication Services maintain their broader leadership positions.

Technology is the key sector to watch after remaining in Weakening and falling 1.53% during the session. Meanwhile, Utilities, Consumer Staples, Real Estate and Financials remain potential candidates for future leadership if their improving trajectories continue.

Overall, the RRG continues to indicate an active sector rotation environment. Energy and defensive sectors are showing the strongest current momentum, while Technology, Industrials and Consumer Discretionary remain under pressure. The ability of the Improving sectors to transition into Leading will be important for determining whether market leadership broadens in the coming sessions.