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Bloomberg
Soapmaker and real-estate stocks have taken over a rally that used to be led by social networks and smartphone makers. Companies with stable earnings and dividends have shepherded gains in November, the first time this year that the two best-performing industries are defensive ones.
So, while this looked like just another week in the bull market, it was actually a departure from the first 10 months, when leadership was rotating among cyclical companies. Investors are evincing an appetite for safety even as the market is poised for its longest streak of monthly gains in a decade.
“It’s not people saying, ‘Just get me out of stocks,’ †said Richard Sichel, senior investment strategist at Philadelphia Trust Co. which oversees $1.8 billion. “It’s more of a case like, ‘Go with my tech that I have, but beef up areas that have been forgotten and are not as pricey.’ â€
The S&P 500 Index slipped 0.1 percent to 2,578.85, the second straight weekly decline. The Dow Jones Industrial Average fell 63.97 points to 23,358.24 over five days, while the Nasdaq Composite Index gained 0.5 percent to 6,782.79.
Strength in haven industries is another rebuke to those who see the S&P 500’s record-setting advance as evidence of excessive optimism. At the same time, it shows investors are reluctant to turn more aggressive as stocks trade near the highest price-earnings ratio since the dot-com bubble. The market has gone longer than ever without a pullback of 3 percent.
Going by money flows to exchange-traded funds, demand for stocks is slowing down. Halfway into November, US equity ETFs have absorbed about $2 billion of fresh money, a pace that if sustained would put the monthly flow at one of the slowest since the presidential election. Over the past year, these funds attracted an average $18 billion a month.
Helping fuel the prudence is turbulence from the fixed income market and lingering uncertainty over the tax reform. The flattest yield curve in a decade rekindled concern that economic growth may slow and a brief selloff in high yield-bonds flashed signs of credit stress. Real estate investment trusts and consumer staples have rallied at least 3 percent this month, almost double the next-best performing industry.