Defensive Trading Undone in $2 Trillion S&P 500 Rally

For the third straight year, rotating into defensive industries is proving to be a losing strategy in the U.S. equity market.

Chip companies led by Micron Technology Inc. and consumer shares such as Netflix Inc. are driving gains since equities bottomed on April 11, replacing soapmakers and utilities that rallied as the economy slowed. The gains reflect projections that these cyclical stocks will deliver some of the strongest earnings growth in the Standard & Poor’s 500 Index this year, based on analyst estimates compiled by Bloomberg.