After stabilizing and rebounding over the past few days, the u.s. stock market was volatile again on Wednesday, with the s & p 500 down 4% and the NASDAQ down nearly 5%, the biggest one-day decline since the 2020 epidemic. Also basically gave back the rebound of the past few days.

Concerns about growth prospects and earnings pressures are the main reason for the renewed plunge in US stocks, against the backdrop of 10-year US debt falling back from 3 per cent to less than 2.9 per cent, reflecting a degree of risk aversion.

The reason for this is that the weak performance of US retail leaders has triggered market concerns about future earnings and growth prospects. Further, there is concern that the Fed may not be able to control inflation with the "appropriate benefits" without harming growth, that is, the so-called failure to achieve a "soft landing".

Following the 11.4 per cent drop caused by Walmart Inc's weaker-than-expected performance the day before, Target Corp's first-quarter results also fell below expectations, sending its share price down nearly 25 per cent. The weaker-than-expected performance of the major retail leaders further raised concerns about the future consumption outlook of US residents and corporate profitability, which in turn dragged down the overall market.

From a micro point of view, the reasons for Walmart Inc's and Target Corp's lower-than-expected results are basically similar, both because higher costs (supply chain, labor costs and bulk prices) erode profit margins, while online and optional consumption is lower than expected.

Institutions believe that concerns about inflation in the United States continue to put pressure on the market, while the results of the retail giants may be a clue to the recession, and investors are closely watching the Fed's rate hike and its economic impact.At present, the market still has to absorb the "significant slowdown in growth", which may mean that the market will continue to adjust.

Separately, investors are hoarding cash as optimism about global economic growth falls to an all-time low and fears of stagflation intensify, according to a newly released survey of fund managers by Bank of America Corporation.

The May survey showed that investors' cash levels reached their highest level since September 2001, which BofA described as "extremely pessimistic" investment sentiment.

BofA's monthly survey is aimed at large institutional investors, with a total of $872 billion under management.

On the wholeInvestors are most bullish on cash, while bullish on commodities, health care and essential consumer goodsBut bearish sentiment is strong for technology stocks, stock markets as a whole, European stocks and emerging markets.

Which plates can stand out?

For investors who have not experienced stagflation to recession, Merrill Lynch clock is a very useful chart for studying economic cycles.

According to the investment clock theory of Merrill Lynch, in the stagflation stage of "economic downturn, rising inflation", holding cash is the most sensible, and the impact of the economic downturn on corporate earnings will have a negative impact on stocks.The stock market will be dominated by periodic sectors, while robust sectors with high dividends and undervalued characteristics will gradually emerge; in terms of industry allocation, public utilities > medical care > essential consumer goods > finance.

There is no doubt that, amid fears of the market and the recession, the mood of market analysts has generally shifted to defense, and investors have turned to defensive stocks.

Saira Malik, chief investment officer of Nuveen, believes that in the medium term, there is reason to be "cautiously optimistic" about the market, and there are already signs that the pace of price increases has slowed and more workers are entering the market, which will be good for market sentiment and the Fed, and will reduce volatility. The analyst also turned to a defensive strategy, she saidCompanies with strong balance sheets and the ability to raise dividends are particularly attractive in an inflationary environment.

It turns out thatDefensive stocks with high dividend yields are indeed the beneficiaries of the current situation.Especially in the context of a strong dollar, they are more likely to be market winners. It is worth noting thatDividend Index ETF-SPDR securities (SDY.US) $It has performed well so far this year, and the fund currently holds including$Exxon Mobil Corp (XOM.US) $、$AT&T Inc (T.US) $、$Chevron Corp (CVX.US) $And other companies, including giants.

Morgan Stanley's analyst Mike Wilson is also optimistic about dividend-income companies, pointing out thatHealth care, utilities and real estate stocks are noteworthy, while investors should avoid non-essential consumer goods and technology hardware companies.

Meanwhile, Savita Subramanian, an analyst at Bank of America, has been increasing his holdings of health care stocks for years. The main reason why this analyst likes this section is thatRegardless of the economy, commodity prices or interest rates, people need to see a doctor and take medicine. Especially in the context of global ageing, the industry has long-term growth opportunities in terms of innovative technologies and treatments.According to the market information, the fund that follows the S & P basket of health care stocksHealth Care Select Industry Index ETF-SPDR (XLV.US) $The current price-to-earnings ratio is 15.5, and the industry's dividend yield is 1.5%, slightly higher than the overall level of 1.3% for s & p.