Rising defensive battle! U.S. stock traders quietly build a defensive barrier in the "false rebound".

The US stock market has rebounded from the lows of the month's sharp decline, but upon closer observation, traders are significantly increasing their allocation of defensive assets in their portfolios. Despite President Trump's announcement of a 90-day suspension of tariffs on most goods, initially stimulating funds into the riskiest areas of the market, investors opting for safety sectors have actually seen better returns. Data tracked by Barclays PLC Sponsored ADR shows that on days when the overall market is rising, defensive stock portfolios generally outperform those tied to the economic cycle; and when market sentiment worsens, defensive sectors continue to outperform cyclical stocks. Similar trends can also be seen in the comparison between the financial health of strong and weak companies. On the day the tariff suspension news was announced on April 9th, both types of stocks saw double-digit rebounds. However, since then, the stock prices of the financially weakest companies have fallen by 3.3%, underperforming those with healthier balance sheets. This defensive preference highlights that the current market rebound has by no means formed a risk appetite sentiment, making it difficult to support sustained growth. Keith Lerner, Co-Chief Investment Officer at Truist Advisory Services, said, "The market is turning to traditional defensive strategies." Positioning in defensive sectors is "a way to hide in the storm until investors see clearer prospects." Lerner said that weeks ago, he was already over-weighting utility stocks, as this sector is less impacted by tariffs. He added that this was part of his overall reallocation to defensive assets. Industries such as utilities, consumer staples, and healthcare often show the most resilience during economic downturns, providing stable profits and relatively steady returns. Data from Bank of America Corp on April 15th also showed that since the market downturn began, funds have continued to flow into defensive sectors like materials and healthcare. Manish Sinha, Managing Director specializing in stock factors and macro strategic sales and trading at J.P. Morgan Securities, stated in a report to clients on April 16th that the tilt towards defensive companies reflects changes in market behavior and the dynamics of risk-return. This shift is particularly evident in the artificial intelligence sector - these engines of growth in the past two years have recently plummeted significantly, with NVIDIA Corporation (NVDA.US) and AMD (AMD.US) stocks being impacted by tariff developments, while ASML Holding NV ADR (ASML.US)'s disappointing financial report further dampened market sentiment. Dave Mazza, CEO of Roundhill Investments, said, "Companies in high-growth areas are struggling, as their fate is momentarily out of their control. Investors are preparing for more stock market turbulence by shifting to defensive sectors."