Defensive industries have been leading more speculative sectors in the S&P 500 this month. Akane Otani writes in The Wall Street Journal:
This month, the biggest gainers in the S&P 500 include firms focusing on telecommunications services, consumer staples and utilities—so-called safe sectors whose steady dividend payouts have long made them investor favorites when markets are volatile or declining. These shares typically lag behind major indexes during rallies, in part because they are perceived to offer limited potential gains. But in September, telecom shares are up 3.1%, consumer staples are up 1.5% and utilities are up 1.5%, versus a 0.1% increase in the S&P 500.
Some companies, like Hershey Co. HSY -0.24% , have rallied after increasing their dividend payouts. Others have jumped on industry-specific news: cigarette makers Philip Morris International Inc. PM -0.25% and Altria GroupInc. MO -0.08% increased after the head of the Food and Drug Administration said he was considering banning flavored e-cigarettes from the U.S., while Corona brewer Constellation Brands Inc. rose after saying it was investing money in a Canadian marijuana grower.
Many of the shares that powered the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite to highs earlier in 2018 have tumbled this month. Apple Inc., Amazon.com Inc. and Alphabet Inc. each has declined at least 3% apiece in September, partly reversing double-digit percentage gains for the year. Facebook Inc. has declined more than 8% this month, adding to its retreat in the second half of this year.
The gyrations show that cautious investors are beginning to look beyond the year’s big market winners and seek protection against the prospect of large swings. The S&P 500 is up 8.6% this year and is less than 1% from its Aug. 29 record. Yet many analysts and traders are wary that major stock indexes could decline if the U.S. trade fight with China intensifies, a selloff in technology shares deepens or an emerging markets rout spills over into developed markets.
Read more here.