Reply #89: S&P Gives a Warning to Investors about What's Coming in 2006 [View All]

[UpInArms]

S&P recommends more defensive equity posture

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38645.6326200579-846892699&siteID=mktw&scid=0&doctype=806&

NEW YORK (MarketWatch) -- Standard & Poor's believes cyclical, economically sensitive sectors will be challenged in 2006 due to rising interest rates, economic uncertainty and a slowing housing market. S&P therefore expects investors to focus on high-quality defensive sectors. Therefore, S&P chief investment officer Sam Stovall downgraded the information technology and consumer discretionary sectors, and upgraded the consumer staples and health care sectors. "As a result of decelerating earnings and questionable consumer spending due to higher heating costs and tapped-out home-equity lines of credit, and an uncertain investor response to option expensing requirements, S&P thinks investors will gravitate toward companies with proven track records of consistent earnings and dividend growth," Stovall said.