Additionally, as signs of an economic slowdown pop up, investors turn to defensive sectors that are less economically sensitive, such as health care. Investors have taken on greater exposure to the health care sector through ETF options like the Health Care Select Sector SPDR (NYSEArca: XLV), iShares U.S. Healthcare ETF (NYSEArca: IYH), Vanguard Health Care ETF (NYSEArca: VHT) and Fidelity MSCI Health Care Index ETF (NYSEArca: FHLC).
On the other hand, Fidelity warned that information technology and consumer discretionary sectors have most often fallen behind during the late-cycle phase as inflationary pressures weigh on profit margins and investors shift away from more sensitive areas.
Additionally, the third quarter profit tallies also reveal a divergence between domestically oriented operations and U.S. companies with a greater foreign footprint where the stronger U.S. dollar has negative affected profits. Domestic profits rose $7.3 billion in the third quarter, or 0.4%, and only down 2.8% year-over-year. In contrast, foreign profits declined $30 billion, a 7.4% fall from the second quarter and 12.2% lower year-over-year.
Investors can also track more domestically focused U.S. companies through small-cap ETF options like the iShares Core S&P Small-Cap ETF (NYSEArca: IJR), which tracks the S&P SmallCap 600; Vanguard Small Cap ETF (NYSEArca: VB), which follows the CRSP US Small Cap Index; the iShares Russell 2000 ETF (NYSEArca: IWM), which tracks the Russell 2000 Index; and Schwab U.S. Small-Cap ETF (NYSEArca: SCHA), which tracks the Dow Jones U.S. Small-Cap Total Stock Market Index.
For more information the U.S. markets, visit our current affairs category.
Max Chen contributed to this article.