Some of the hottest stocks in the United States point to an economic cooling.
Utilities and healthcare are among the best performing groups in the S&P 500 this quarter, with gains of 7.8% and 6.6%, respectively, compared to a 4.9% increase in revenue. broad stock index. The big winners include the public team NextEra Energy Inc., which is up 14% this quarter, while the shares of medical company Danaher Corp. they increase by 19%.
The gains are remarkable because investors tend to pile on these types of stocks when they expect the outlook to darken. Visits to the doctor and the use of electricity are less likely to decrease a little more than spending on vacations or new furniture. Goldman Sachs this month cut its third-quarter U.S. economic growth forecast to 5.5% from 9%, citing a slowdown in consumer spending in the face of renewed Covid-19 outbreaks.
A fall in economic growth since the mid-2021 pace hardly foreshadows a recession, which is the development that often marks the end of stock gains. But rallies in these so-called defensive sectors may portend wider market setbacks, investors say, which may explain new evidence for a market whose post-pandemic rise has surprised many traders.
“When these sectors work well, as they do now, it tells you that the market is preparing for a slowdown in the economy or some kind of correction in the broad market,” said Phil Orlando, head of the equity market. strategist to Federated Hermes asset manager.