📮Market Progress🏀
It was yet another fight for gain as the S&P 500 gave up its record high on Tuesday given the continuous global surge in Omicron cases. Covid-19 had infected more than 281 million people since March 2020, and 5.4 million have died.
The re-opening play seems to have some life given CDC new recommendation to reduce the isolation period to encourage more people to return to the workforce. It is also a sign that perhaps Covid is becoming more endemic, and there is a better vibe around the sectors moving into New Year.
⏳Defensive stocks shine again🤼
Given the higher volatility, defensive stocks have become the radar of most investors. A look at health care and utility ETF have been rising since early November. It is not a surprise given their well-loved nature in times of economic risks.
Market participants are jittery with the risks posed by the Fed. Investors shift towards staples, healthcare and utilities is based on the idea that lesser money in the pocket seldom dents the demand for these products and services.
⚖️The bond market speaks the same tone🎢
The bond yield curve has been flattening, implying that economic growth is getting less rosy. In such a situation, defensive stocks tend to shine compared to cyclical stocks.
If interest rate hikes and bond yields seem too much to take in a portfolio, a moderate shift to defensive stocks might be a cushion in a challenging environment.
The stock market has a less conviction rally, and we remain cautious of downside risk. Pika World wishes everyone an enchanting week ahead
Cheers,
Pika Nat.
More Stories
Markets in risk-on mode with year end rally on track.
Consumer Discretionary Stocks Lead Losses, Hinting at Recessionary Concerns
All is well.