These beaten-down stocks are expected to roar back in 2019

Heading into earnings season, there has been quite a bit of positive energy in the U.S. stock market, following a brutal fourth quarter. The S&P 500 Index has returned 3.6% this year through Jan. 11, following a 13.5% decline in the fourth quarter.

Here’s how all 11 S&P 500 SPX, -0.56% sectors have performed, sorted by how poorly they fared in the fourth quarter:

Total returns  S&P 500 sector 2019 through Jan. 11 Q4 2018 2018 2017 Energy 8.1% -23.8% -18.1% -1.0% Information Technology 2.6% -17.3% -0.3% 38.8% Industrials 5.4% -17.3% -13.3% 21.0% Consumer Discretionary 6.0% -16.4% 0.8% 23.0% Communications Services 6.3% -13.2% -12.5% -1.3% Financials 2.8% -13.1% -13.0% 22.2% Materials 3.4% -12.3% -14.7% 23.8% Health Care 1.6% -8.7% 6.5% 22.1% Consumer Staples 1.6% -5.2% -8.4% 13.5% Real Estate 3.2% -3.8% -2.2% 10.8% Utilities 0.6% 1.4% 4.1% 12.1%   S&P 500 Index SPX, -0.56%   3.6% -13.5% -4.4% 21.8% Dow Jones Industrial Average DJIA, -0.44%   2.9% -11.3% -3.5% 28.1%  

For the broad indexes, 2019 looks good so far when compared to all of 2018. However, there is still a way to go to make up for losses.

In a report on Jan. 14, Goldman Sachs U.S. chief equity strategist David Kostin said his team’s “base case” target for the S&P 500 at the end of 2019 is 3,000 points, which would be a 16% increase from the close at 2,596 on Jan. 11.

Goldman’s data indicate that “decelerating growth favors defensives over cyclicals.” Following a year of massive cuts in federal income taxes, it is no surprise that U.S. companies aren’t expected to increase their earnings in 2019 anywhere near as much as they did in 2018. But earnings don’t tell the full story. The consensus among analysts polled

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