After rebounding sharply in January, the benchmark S&P 500 is wobbling again as investors worry the Federal Reserve will take interest rates higher than previously expected and keep them elevated for longer to thwart inflation.
Sell-offs can send investors looking for safety in so-called defensive names, which tend to have solid dividends and businesses that can weather rocky times.
“Last year it was really easy to hide out in defensives,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial. “It worked really well last year. I think it’s going to be more complicated this year.”
In the initial weeks of 2023, the argument for defensives has been weakened by evidence the economy remains strong as well as by competition from assets such as short-term U.S. Treasuries and money markets that are offering their highest yields in years.
Sectors such as utilities are known as bond proxies as they typically provide stable earnings…
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