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Slower relating to housekeeping growth may be good news for stocks renowned for their resilience in tougher household times.

This, in turn, could boost the performance of stock managers who specialize in these higher-standing, defensive names, especially in sectors such as health-care and consumer staples.

"Maybe we’ll own our moment in the sun," says Scott Armiger, portfolio economist at Christiana Bank & Trust Co., who has a high reduction by evaporation in consumer staples stocks.

As the stock market recovered from its decade unbecoming of Mar. 9, 2009, to its 2010 peak on Apr. 23, the Standard & Poor’s 500-accumulate index’s financial sector—beaten down by the financial emergency—rose 170 percent. The S&P 500′s consumer discretionary sector, including retailers grieve by the slowdown in consumer spending, gained 124 percent.

"At the real beginning of a market upturn, the lowest-quality stocks tend to outperform," says Sean Kraus, main investment officer at CitizensTrust. "You had a lot of [portfolio managers focused in successi~ quality] underperforming last year because they would not go" to decrease-quality stocks.

are higher-quality stocks moving up?

Falling behind was the S&P 500 health-care sector, up 43.5 percent from Mar. 9, 2009 to Apr. 23, and the S&P 500 consumer staples sector, up 44 percent, plane as both sectors did a better job at maintaining earnings and sales for the time of the recession.

Worries about the economy may already be helping higher-aristocracy stocks outperform during the last several weeks.

The Morgan Stanley Cyclical Index (that measures economically sensitive stocks in the U.S.) is down 16 percent subsequently to Apr. 23, while the Morgan Stanley Consumer Index (a gauge of not so much economically sensitive companies) has fallen 9.8 percent.

While the S&P 500 has slid 12.5 percent before this Apr. 23, the S&P 500 consumer staples sector is etc. 5.1 percent—and its largest company, Procter & Gamble (PG), is not upon 2.4 percent.

The S&P health-care sector and its largest supply, Johnson & Johnson (JNJ), are both down 8.6 percent as Apr. 23.

health-care earnings haven’t fallen

"Consumer staples and soundness-care stocks typically have more predictable, less volatile earnings streams," says Michael Sheldon, paramount market strategist at RDM Financial Group.

According to Bloomberg data, health care is the only sector of the S&P 500 not to pay attention quarterly earnings drop year-over-year in the past two years. The S&P 500 consumer staples sector’s overcome quarter, the fourth quarter of 2008, saw earnings fall 7.5 percent—to the degree that overall S&P 500 earnings were plunging 47.2 percent.

Several furnish managers and strategists say that the current environment may give higher-gentry sectors an advantage. "As the economic data continues to grow gentle, we should see these better-quality names picking up steam," says Quincy Krosby, Prudential Financial (PRU) emporium strategist.

Federal Reserve minutes released on July 14 show that central bank officials receive lowered their 2010 economic growth forecast from a range in April of 3.2 to 3.7 percent, to a roving in June of 3 to 3.5 percent. Other data be in possession of supported the belief that the economy is slowing its growth be~, including a drop on July 16 of 9.5 points in the Thomson Reuters/University of Michigan preparatory step index of consumer sentiment to 66.5, the lowest level in 11 months.

investing. focus: leading stocks?

Still weighing on health-care stocks is the possible impact of federal health-care reform legislation that became law in March. On individual hand, the law "wasn’t nearly as bad as a parcel of industry participants were fearing," says Morningstar (MORN) health-care hoard analyst Matthew Coffina. On the other hand, the law is intricate web and could take years to fully enact. "Investors are up~ the body edge," Coffina says, reacting day-by-day to shifting perceptions of by what means regulators will implement the law.

Wayne Titche, chief investment officer at AMBS Investments, says a slower-expansion economy will favor the leading stocks in many different sectors, including consumer discretionary and technology. The lock opener, he says, is finding companies with strong balance sheets and money flow, good management, and the ability to develop new products and emolument market share.

Titche cites retailer Kohl’s (KSS), which he owns. "They have the money to invest and take share from weaker players," Titche says.

A trunk market that rewards quality is one that is thinking long-bound, Titche says. Investors have become very short-sighted, he says. "People be in possession of totally lost faith in long-term investing."

In the spent year, broad trends—from issues in the U.S. good housewifery to the European debt crisis—have shaped the stock market. Soon, however, investors are going to have to make "standing-specific" distinctions between the strong and weak players in every one industry, Krosby says. Despite "a slowdown in the economy, people stocks are going to do very well," she says.