Wall St Week Ahead-Defensive stocks may be ripe for reversal after stellar December

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NEW YORK – Advertisers have flooded into defensive areas in the last few weeks of the year, sparking a rally that some believe could lose power by early 2022.

The best-performing sections of the S&P 500 this month are consumer goods, real estate trusts, health care and essentials. Each segment, which is considered to be the most volatile in the period of uncertainty, increased by 9% or more in December and exceeded the maximum gain of about 5%.

In contrast, the S&P 500’s strong and technical portfolio, among the best performers of the year, rose 2.9% and 3.3% in December. The larger index rose 27% in 2021 and is at risk of a straight third year of gaining two numbers.


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Advertisers have had a number of reasons to defend themselves in recent weeks, as uncertainty over Omicron’s new reforms, rising prices and hawkish changes in the Federal Reserve prompted the case to remain vigilant.

Total revenue from the Consumer Staples Select Sector SPDR Fund stood at $ 697 million in December, making it the strongest month since July, according to Refinitiv Lipper data. The Health Care Select Sector SPDR Fund raised $ 963 million this month after drawing $ 1.1 billion in November, its best month since July.

Some participants in the market, believe that self-defense meetings are short-lived and anticipate the end of early 2022 as investors return to greater expertise and stocks that have kept markets afloat for years to come.


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Zachary Hill, head of history management at Horizon Investments, believes some of the defensive strengths could show financial managers taking advantage of successes and redistributing money to bad names, which happens at the end of the year for many investors.

“It’s very surprising after a very good year for stocks to see some of the remaining stocks … do a little better,” Hill said. “It’s something that could change in January.”

That idea is clear this year, with S&P forces and information technology increasing at 48% and 33% per year, respectively. Profitability reduces annual performance, REITs, health care and customer needs.


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Based on historical data, the instruments became the most active S&P segment in December, earning 1.9% in the month since 1990, down 0.25% on average in January, according to a CFRA Research survey.

The stock market, meanwhile, has been the worst performer in December with an average gain of 0.67%, but gained a median gain of 2.83% in January, which showed.

Since 1990, the technology sector has grown by about 4,650%, while the support sector has grown by about 250%.

“People are more prepared to take risks in the new months than they are in the last months of the year,” said Sam Stovall, chief financial officer at CFRA.

Risk at recent securities meetings could also come from high Treasury yields, which could be accompanied by a growing Fed and reduced interest rates and other areas that attract investors and their increased profits, says Rob Haworth, a financial analyst. US Bank Wealth Management.


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An earlier December Reuters survey of more than 60 fixed-income analysts showed yields over the 10-year U.S. increase to 2.08% over the next 12 months. On Friday, yields for 10 years were at 1.50%. The Fed has shown a sharp decline in consumer spending and a triple rise in 2022.

Some, however, say that the aggressive Fed can also weigh on the broad S&P 500, while the count is at the highest level in almost two decades.

On Dec. 20, Morgan Stanley analysts have said they prefer stocks over cyclicals, as the Fed begins to repatriate stocks.

The bank’s analysts wrote: “Growth can be at a much lower risk than defenders consider the most valuable assets.

Hill, of Horizon Investments, believes the stocks could become more volatile next year after 2021 placid. The S&P 500 one-month volatility is approximately 12.5 per year, the lowest since 2017, according to Refinitiv data.

“It’s not going to be as straightforward as it was this year but we still think the stocks are good,” he said. (Reports by Saqib Iqbal Ahmed; Edited by Ira Iosebashvili, Howard Goller and Rosalba O’Brien)



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