It is time to get defensive as Wall Street enters a “tricky” period, according to JPMorgan. Stocks have lagged as of late after a stellar start to the year that was bolstered by the artificial intelligence trade. All three major benchmarks are down on the quarter. The Dow Jones Industrial Average has lost 2%, while the S & P 500 and Nasdaq Composite have slid 1% and 0.2%, respectively. Some on the Street see further consolidation ahead. Strategist Mislav Matejka said equities are coming up against a seasonally weak period and advised investors to buy traditionally defensive stocks such as utilities and staples. “Entering seasonally tricky time of the year, on top of a challenging combination of inflation at risk of staying too high and profit margin pressures,” he wrote Tuesday. “The latest market move to a more Defensive trading should have legs, such as recent outperformance of Utilities and Staples.” “We continue to believe that will happen irrespective of bond yields direction from here, alongside a more positive performance of commodity sectors – Energy and Mining,” he said. XLU 1M mountain Utilities Select Sector SPDR Fund (XLU) Utilities have outperformed quarter to date, while most other sectors have shown weakness. The Utilities Select Sector SPDR Fund (XLU) advanced 4.7% this quarter, making it the top-performing sector in the S & P 500. NRG Energy and NextEra Energy have led the gains, soaring 20% and 12%, respectively. Communication services and staples are the only other sectors higher for the quarter, up 2.2% and 0.4%, respectively.
JPMorgan says the market is about to get tricky, buy utilities and staples stocks starting to outperform
May 7, 2024
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