Analysis
Staples, Utilities and Healthcare Keep Winning While the Market Treads Water
Consumer staples rose 1.17% on October 12 to their highest close since September 14, as defensive sectors outperformed technology for the second week running. The S&P 500 has gone nowhere since its October 6 record.
The S&P 500 closed at 7,807.24 on Monday, October 12, about 0.15% below its October 6 record. On the surface, nothing much has changed in a week. Sector by sector, a lot has.
Since the record, the leaders have been the market's most defensive groups. Consumer staples (XLP) rose another 1.17% on Monday to $84.41, their highest close since September 14. Utilities (XLU) gained 0.53%, healthcare (XLV) 0.69% and real estate (XLRE) 0.75%. Over the same week, technology (XLK) has lost about 2.8% and the semiconductor ETF 6.6%.
This kind of rotation usually signals caution rather than panic. Investors aren't selling stocks as a whole — the index is barely changed — but they're moving from companies whose value depends on fast future growth toward businesses with steady demand and dividends. Higher oil prices and long-term bond yields still above 5.2% make that shift easier to justify, because they weigh more on growth valuations than on companies that sell groceries, electricity or medicine.
It matters for traders because rotations like this often precede a period of choppier index moves. Watch whether this week's bank earnings and Wednesday's inflation data push money back into technology, or deepen the move toward defensives. Our guide to relative strength explains a simple way to track which sectors are leading.