Kully Samra, branch director at Charles Schwab UK, gives his view on the US and highlights some sectors for investors to keep an eye on.

The overall market has been a bit more volatile of late and incoming economic data has shown a more mixed picture, leading to kneejerk reactions in the market as investor sentiment seemingly shifts on a daily (or even hourly) basis. And although our sector recommendations are shorter-term in nature (three- to six-month outlook), we certainly don't think investors should be shifting positions with every economic report that comes out.

Keeping the bigger picture in mind is key to both your long-term asset allocation decisions and shorter term, smaller tactical moves you may make with sectors. 

With that in mind, we are holding our relatively neutral overall market position in place as we watch developments continue to unfold.

We want to guard against making overly aggressive bets on areas of the market in an environment such as this, even though that can be less than exciting at times—but excitement doesn't necessarily equal investment success! 



We continue to believe that health care will outperform in the coming months as it has a nice combination of growth characteristics and defensive qualities that we believe are quite attractive in this more uncertain environment. With nice cash balances and some of the political risk being pulled back, opportunities for the maligned health care sector to outperform seem to us to be growing. While the attention toward the group in the media has fallen off, we believe it's time for investors to pay more attention to the sector as one to look to for potential outperformance.

On the flip side, although recovering, the consumer is facing numerous headwinds and after a nice move in 2009, we believe the consumer discretionary sector is poised to underperform. Wage gains are relatively weak, unemployment remains elevated, and retailers are having trouble maintaining pricing power to any degree. The result of this in our opinion is a continuing difficult profit environment in the discretionary sector—helping lead to our underperform rating on the group. The discretionary sector is also one of the first to recover after a downturn, but is also one of the first to underperform once economic growth starts to flatten out—as we believe we are currently seeing now.

We continue to watch developments as they come down and stand ready to make more aggressive moves when we believe they are warranted. Until then, steady as she goes.