Friday, 13 September 2024 Reading time : 2 minutes

The surge in US technology stocks has come to a halt for the time being: just over two months ago, on 10 July, the technology index Nasdaq Composite reached its all-time high. This was followed by a collapse that saw the index fall by more than 13%. The Nasdaq Composite has since stabilised, but remains under pressure.

Other sectors are benefiting from investors' retreat from technology stocks. Among the winners is the consumer staples sector, which lagged the S&P 500 in the first half of the year. Shares have gained more than 7% since 10 July (total return, as of September 11, 2024), while the technology sector has lost around 8.2% over the same period and the benchmark index is trading 1.2% lower. 

The consumer staples sector includes makers of everyday products such as pasta, toothpaste and detergent, as well as tobacco. The industry leaders in the US include Mondelez (Oreo, Ritz), Pepsico and Kraft Heinz. The sector is considered defensive as consumers buy these products even in difficult economic times. As a result, it often comes under less pressure than other sectors during a recession. This stability also makes companies reliable dividend payers. The downside is that the sector is characterised by slow and limited growth.

Until recently, this has not been a popular theme in the equity markets, with the consumer discretionary sector tending to be overshadowed by the fascination surrounding progress in artificial intelligence. The same pattern can be seen in other defensive sectors. For example, utilities and health care stocks lagged technology stocks and the S&P 500 until the peak of the tech rally. Since then, the two sectors have outperformed both the technology sector and the market as a whole (Utilities: +11.4%, Healthcare: +6.2%). 

It remains to be seen whether this rotation will continue or whether investors will take advantage of the pullback in technology stocks to enter the market. However, the coming weeks and months will be eventful and likely to see further movement in financial markets. The Federal Reserve's next monetary policy decision is due on September 18. In addition, the US presidential election is looming: on November 5, Americans will vote on who will replace outgoing President Joe Biden in the White House.

Barrier Reverse Convertible on US consumer staples
9.50% p.a. BRC on Mondelez, Pepsico and Kraft Heinz
Barrier: 75%
Valor: 135 805 587

Barrier Reverse Convertible on US technology equities
16% p.a. BRC auf Amazon, Alphabet and Nvidia
Barrier: 55%
Valor: 135 805 582

Indicative terms

 

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