While capital-goods stocks first came to life in April, their recent fallback has spurred Salomon Smith Barney analysts to rate them a buy, as earnings expectations improve. Orders have jumped to their highest levels since June 1994. The outlook for cyclicals is very favorable.
Investors can play the industrial sector via several funds, as the adjacent table shows.
Domestic factors are also playing a large part in the comeback of industrials. In recent years, Wolf notes, the U.S. economy has been alternately driven by consumer and industrial cyclicals. Industrials suffered through a recession, he says, while consumer stocks raged on, and now the tides are turning for the conglomerates. Ruback agrees that consumer cyclicals are past their prime. In a sense, they're having to pay people to take the cars.