Amid escalating trade tensions, investors are increasingly turning to defensive stocks, which are known for their stable earnings and dividends. This shift is reminiscent of strategies employed during previous trade conflicts, as economic uncertainty looms large. Defensive companies within the S&P 500 have gained approximately 2.4% over the past three weeks, contrasting with a 1.2% decline in cyclical stocks. This trend highlights a preference for "trade-war heroes" like H&R Block, Cigna, and Apple, which are perceived as safer bets due to their low volatility and high buybacks. The ongoing investor shift towards these sectors is evident as the S&P 500 Index experiences slight declines amidst tariff-related headlines.
The ProShares UltraPro S&P 500 (UPRO) ETF experienced a decline, dropping 0.75% to $93.77 as of 11:20 AM on Wednesday, February 5.