Fear Of Uncertainty Held S&P 500 Back From Record. Now It’s Real

Meanwhile, the lack of clarity from Washington is keeping even potentially bullish large investors from buying in at these prices. Big money managers are historically underweight stocks — their overall equity positioning has been lower than this only 28% of the time since 2010, according to Deutsche Bank AG.

“We feel that the market is asking, ‘OK, now what?!’ and stalling a bit, waiting for some breakthrough,” said Keith Buchanan, senior portfolio manager at GLOBALT Investments, who remains cautious about the risks to equities and fixed income and is buying some precious metals.

Even softer trade rhetoric from Trump is failing to juice the market like it has in the past. Last week, the US and China agreed to the framework of a trade agreement, the kind of announcement that not too long ago would’ve sparked a buying binge in the stock market. But ultimately the negotiations just brought tariff rates back to their already high levels, tempering the enthusiasm.

Read More: For Trump, Resolving US-China Trade Fight Comes at a Cost

“There’s surely an element of buyers exhaustion, at least as it relates to the headlines,” said Dan Greenhaus, chief economist and strategist at Solus Alternative Asset Management. “Investors probably want to hear something more substantive or concrete than what they’ve heard thus far.”

Search for Safety 

That caution is apparent beneath the stock market’s surface, where traditional haven sectors are outperforming as investors rotate away from risk. The real estate, energy and pharmaceutical sectors are leading the S&P 500 this month, handily beating the once high-flying Magnificent Seven mega tech stocks, after being among the index’s worst groups in May.

The search for safety makes sense to GLOBALT’s Buchanan, who questions how stocks are less than a multiple away from the valuation highs of the first quarter — a time when there was no palpable fear of a recession, inflation was headed toward the Fed’s target, and tariffs appeared to be a mere negotiating ploy.