Investors seek security at historical maxims

Companies with solid balance sheets stand out, while vulnerable roles arouse caution even in weeks of intense growth

While the S&P 500 index reaches new records, warning signs have emerged behind the scenes, indicating that not everything is as solid as it appears. The recent market euphoria may be hiding weaknesses, and investors begin to adjust their strategies to protect themselves from possible turbulence.

According to recent analyzes of Goldman Sachs Group Inc., a basket of S&P 500 companies with more robust financial balance sheets have registered the best week since early April, surpassing companies with more fragile structures. Among the companies that stand out are FASTAL CO., PALANTIR Technologies Inc. and West Pharmaceutical Services Inc., all with high cash and capable of crossing periods of economic uncertainty. These papers accumulated gains for three consecutive weeks – the largest sequence since Donald Trump’s first tariffs knocked out the markets.

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This movement reflects strategic rotation by investors, who seek to remain active in the market, but with less exposure to vulnerable companies. “We have realized that investors, despite the discharge, are getting nervous,” said Brian Jacobsen, chief economist at Annex Wealth Management. He adds that, given the current scenario, “a little caution is necessary.”

The S&P 500 rose 29% since the minimum recorded on April 8, reaching a historic record last Tuesday. Much of this growth was driven by enthusiasm around artificial intelligence, with companies such as Nvidia Corp. and Microsoft Corp. reaching multitrize market assessments. In addition, solid corporate profits reinforced the belief that Trump’s turbulent trade policies did not cause the predicted losses.

However, not all sectors benefited equally. While adjacent technology and segments continue to prosper, consumer products suppliers and industrial equipment manufacturers face signs of weakness. This disparity began to draw the attention of analysts and investors.

Citigroup Inc. strategists identified “early” signs of recovery in the value factors between July and early August, as investors sought companies whose shares were undervalued in relation to financial fundamentals. This movement ended up hurting technology papers without profit and other speculative bets, showing that even in a market on the rise, financial caution is becoming a decisive factor for investment decisions.

The combination of growth concentrated in specific sectors, uncertain trade policies and the search for financial protection shows that, despite historical maxims, investors are increasingly aware of the risks that may arise under the market surface.

“Higher quality defensive names have remained firm,” said Colin Cieszynski, portfolio manager and chief market strategist at Wealth Management. Among the sectors that stood out are telecommunications, public service concessionaires and insurers, who presented consistent performance. The giants of technology were also strong. Other examples of defensive success include tobacco producer Philip Morris International Inc., which accumulates 40% high in 2025.

However, analysts warn that the rally of the market is concentrated in a few names. The seven technology actions of the so -called “magnificent 7” have been responsible virtually all over April, while the range of the market – the difference between high and low actions – has deteriorated. The S&P 500 index, adjusted to eliminate market value biases, fell on 10 of 13 sessions until Monday, while the capitalization-weighted index rose in almost half of those days.

In addition, the concern grows that the current high market has already passed its strongest point, with a duration above the historical average. “The bull is coming to old age with the right conditions for a bear to begin,” wrote Tim Hayes, a chief global investment strategist from Ned Davis Research, in a statement of 7 August.

Even with these warning signs, action appetite remains high. According to Bofa Securities, all major customer groups bought US actions for the second consecutive week, recording the “largest entries of individual actions in two years”, with investments in both defensive and cyclic sectors.

The selectivity demonstrated by investors seems prudent, considering the seasonal historical market. Over the past 25 years, S&P 500 has dropped an average of 1.5% in September – the worst performance among it.

Still, many Wall Street strategists maintain an optimistic view. Consensus suggests that despite the expected volatility in the coming months, falls should be seen as buying opportunities. “With many strategists predicting volatility in the coming months and yet recommending that falls are purchased, it is hard to imagine a great retraction without a real recession,” said Chris Zaccarelli, director of investment at Northlight Asset Management.

The scenario, therefore, remains mixed: while the market celebrates historical maximums and the technological sector leads discharge, cautious investors seek defensive companies and diversification, aware of warning signs that may indicate a possible slowdown in the near future.

With information from Bloomberg*