Defensive Wall Street Stocks May Be In For Reversal
Investors have piled into traditionally defensive stocks in the last weeks of the year, spurring a rally some believe may lose steam early in 2022, Saqib Iqbal Ahmed reported for Reuters.
Photo Insert: The New York Stock Exchange
The S&P 500's top-performing sectors this month are consumer staples, real estate investment trusts, healthcare, and utilities. Each of the sectors, which are viewed as popular destinations during times of uncertainty, have risen by 9% or more in December and outpaced the broader index's gain of about 5%.
By contrast, the S&P 500's energy and information technology sectors, among the year's best performers, are up 2.9% and 3.3% for December. The broader index is up 27% in 2021 and on track for its third straight year of double-digit gains.
Some market participants, however, believe the rallies in defensive shares are likely a short-term phenomenon and expect an unwinding in early 2022 as investors return to the big technology and growth stocks that have led markets higher for years.
Investors have had plenty of reasons to turn defensive in recent weeks, as uncertainty over the new Omicron variant, soaring inflation and a hawkish shift at the Federal Reserve bolstered the case for caution.
Net inflows into the Consumer Staples Select Sector SPDR Fund stood at $697 million in December, putting it on track for its strongest month since July, according to Refinitiv Lipper data. The Health Care Select Sector SPDR Fund drew net inflows of $963 million this month after pulling $1.1 billion in November, which was its best month since July.