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 boring 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 $1.8bn. “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.’ ”
The S&P 500 Index slipped 0.1% to 2,578.85, the second straight weekly decline. Wednesday’s 14-point retreat was the first single-day drop exceeding 0.5% in 51 days, halting the longest streak since 1965. 
The Dow Jones Industrial Average fell 63.97 points to 23,358.24 over five days, while the Nasdaq Composite Index gained 0.5% 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%.
Going by money flows to exchange-traded funds, demand for stocks is slowing down. Halfway into November, US equity ETFs have absorbed about $2bn 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 $18bn 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.
In Washington, while House Republicans passed their tax bill, their colleagues on the Senate Finance Committee approved a far different version, including provisions to delay a corporate tax-rate cut by one year. 
Playing defensive while the market goes up is nothing unusual. There were two distinct bouts of it in 2016, in June and December. 
Each time, investors quickly returned to cyclical shares and while the market suffered minor setbacks, it bounced back within days.
At other times, a cautious stance preceded trouble. Investors flocked to safety stocks in July 2015, when the S&P 500 was hovering near an all-time high. Such caution proved prescient as the index experienced two back-to-back 10% corrections over the following six months. Along the way, defensive leadership persisted.
Real estate investment trusts and consumer staples have rallied at least 3% this month, almost double the next- best performing industry. The advance helped drive the S&P 500 toward its eighth consecutive monthly gain, the longest streak since early 2007.
While the odds of a pullback are rising, corporate earnings are back on solid footing, according to Tony Dwyer, an equity strategist at Canaccord Genuity. After a yearlong contraction through mid-2016, S&P 500 profits have rebounded. Analysts expect growth to exceed 10% in each of the next three quarters, estimates compiled by Bloomberg show.
“Although the more defensive sectors should perform better in the context of a near-term correction, the under-appreciated economic re-acceleration causes us to favour ‘pro-growth’ sectors,” Dwyer said. He predicts the S&P 500 will rise to 2,800 by the end of 2018 and recommends financial, industrial and commodity shares.



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