JPM identifies consumer sectors to buy for a 2H rebound

Investing.com -- Beaten-down consumer stocks are forming a bottom and could deliver better performance in the second half of 2026, according to JPMorgan, which identified several sub-sectors trading at multi-year lows as the most attractive entry points.

Analyst Mislav Matejka noted that while cyclical sectors broadly have outperformed this year (banks on rising rates, industrials on infrastructure spending, and technology on AI) consumer cyclicals have been "the one area that has struggled," underperforming since COVID's V-shaped recovery.

As a result, "consumer plays' price relatives are generally at multi-year lows, their valuations are undemanding, and consumer confidence indicators in most parts of the world are near record lows."

Matejka argued that historically, consumer stocks have tended to outperform from low points in consumer confidence, and identified several potential catalysts for a second-half recovery.

Easing geopolitical uncertainty could push oil prices lower, with Brent already down 25% quarter-over-quarter, which JPMorgan said should support real disposable incomes and reduce pressure on central banks to continue tightening.

The bank also noted that tariff rates have come down year-to-date, a meaningful positive for consumer goods sectors, while U.S. midterm elections raise the possibility of a consumer relief package.

JPMorgan said luxury, airlines, hotels, travel and leisure, and retail consumer plays look most interesting heading into the second half.

The bank remains "relatively less optimistic about the Autos sector, on structural concerns," though it acknowledged that even there, recent underperformance is becoming stretched.

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