Amid escalating trade tensions, investors are increasingly turning to defensive stocks within the S&P 500, which have shown resilience in times of economic uncertainty. This shift is reminiscent of strategies employed during previous trade conflicts, where defensive stocks outperformed their cyclical counterparts. Over the past three weeks, defensive companies in the S&P 500 have gained approximately 2.4%, while cyclical stocks have declined by 1.2%. This trend is driven by investor preference for stable earnings and dividends, as well as the perceived safety of low-volatility stocks like H&R Block, Cigna, and Apple, which are seen as "trade-war heroes."
The iShares Core S&P 500 ETF (IVV) experienced a slight decline, dropping 0.22% to $603.33 as of 11:20 AM on Wednesday, February 5.