Erin Gibbs, equity chief investment officer at S&P Global, points out that the current global outlook and a low interest rate environment have caused investors to turn to the more defensive in their stock selection.
"I think we're looking at this global deflationary environment for at least another quarter if not two and we're seeing investors prefer the more defensive stocks," she said Friday on CNBC's "Power Lunch." "As long as the U.S. market is the best house in a bad block and we keep looking for more of these defensive stocks, particularly with the Brexit [vote] coming up, I think we're going to continue to see this trend of the S&P 500 outpacing."
The S&P is up 1 percent this year through Friday's close, while the Nasdaq 100 is down nearly 5 percent. The Nasdaq 100 is largely composed of big-cap tech stocks, while the S&P has a larger representation of names that are less levered to economic strength and to investor risk appetites. Within the S&P, the best-performing sectors are utilities and telecom services, both of which tend to be defensive, yield-sensitive plays.
"All the higher beta names you'd like to see leading in a global market are not," Todd Gordon of TradingAnalysis.com said Friday on "Power Lunch." "So provided the Fed continues to remain dovish, rates on hold, those staples and utilities and dividend payers will continue to outperform."