How Wall Street pros are looking at fears over a US economy slowdown

A choppy February for investors was punctuated by a poor speechmaking connected user confidence, a soft study connected user spending, and a sell-off crossed galore of the momentum trades that had defined the marketplace enactment this year.

"The fearfulness present among a batch of investors present [has] go that the system could beryllium slowing down faster than the Fed is consenting to react, which is simply a pugnacious situation," Steve Sosnick, main strategist astatine Interactive Brokers, told Yahoo Finance an interrogation connected Friday.

For the month, the tech-heavy Nasdaq Composite (^IXIC) fell astir 4% portion the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) were down 1.4%.

Sosnick noted that successful caller days, the Dow has been the champion comparative performer among the large US banal indexes fixed its little weighting towards the tech and momentum names that play a larger relation successful its adjacent indexes the S&P 500 and Nasdaq.

Consequently, antiaircraft plays similar Consumer Staples (XLP) person a much salient power connected the Dow than the S&P 500.

"This is an situation either to lighten up [on stocks], rise a small cash, which, considering the currency is inactive paying you 4%, is not a unspeakable spot to be," Sosnick said. "But if you privation to enactment invested, you whitethorn privation to determination a spot much toward debased beta stocks and precocious dividend stocks due to the fact that they're a small much insulated from the market's hazard disconnected mentality close now."

Low beta stocks thin to commercialized with little volatility than the mean banal successful the market, either going up oregon down little erstwhile the marketplace moves 1 mode oregon another.

Whether this marketplace is being shaken by fears implicit economical maturation — oregon is conscionable seeing a rotation arsenic investors determination distant from caller winners — is simply a statement that looks acceptable to specify the last period of the archetypal quarter.

"The banal marketplace is successful the midst of different maturation scare, successful our opinion," Ed Yardeni and Eric Wallerstein astatine Yardeni Research wrote successful a caller note. "The latest batch of economical indicators has been weak. The existent maturation scare is reminiscent of past summer's scare."

That sell-off saw the S&P 500 autumn conscionable little than 10% peak-to-trough earlier the scale recovered to marque caller all-time highs by November.

Neil Dutta, caput of economics astatine Renaissance Macro, warned successful a caller enactment to clients that the system does look to beryllium softening, with the Federal Reserve's determination to support rates elevated amounting to a "passive tightening of monetary argumentation [that] is the ascendant hazard and that has important implications for fiscal marketplace investors."