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Is it Time to Get Defensive?

By Matthew Kerkhoff

 

The S&P 500 is mostly flat for the year, but beneath the surface there has been a lot of movement. Some sectors, such as consumer discretionary, have pulled the major index up, while others are acting as a counterweight.

 

The chart below shows YTD performance for each of the nine S&P sector ETFs, relative to the S&P 500. Leaders to the upside include consumer discretionary, technology and healthcare. At the bottom end of the spectrum we have energy, utilities and materials.

 

 

One of the interesting battles that is occurring within the broader market has to do with the so-called defensive sectors.

 

These sectors include companies that produce items which are considered necessary for consumers. No matter how the economy is doing, the revenues, earnings and cash flows of these companies tend to remain stable.

 

The primary sectors considered defensive are Utilities, Consumer Staples and Health Care. After all, consumers cannot easily manage without ... Log in or subscribe to continue reading.


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