How the US Midterms May Reshape the Stock Market

Active investors are shifting toward defensive positioning by favoring the S&P 500 excluding AI and the healthcare sector, which combines historical uncorrelation with emerging AI-driven diagnostic growth. While the data center trade has suffered severe valuation compression following underperformance, the market anticipates a rebound as price corrections eliminate overvaluation headwinds. With traditional defensives like consumer staples deemed unattractive due to poor yield metrics relative to bonds, strategy focuses on quality free cash flow generation ahead of the December 9th FOMC decision.