These sectors are seeing inflows despite Wall Street's coronavirus fears, says State Street

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Navigating the coronavirus outbreak

The coronavirus hasn't cracked investors' confidence yet.

Several S&P 500 sectors are seeing "massive" inflows despite Wall Street's jitters around the coronavirus outbreak, Matthew Bartolini, head of SPDR Americas Research at State Street Global Advisors, told CNBC's "ETF Edge" on Tuesday.

"They're buying everything that was sort of impaired by [U.S.-China] trade tensions," said Bartolini, who conducts research and analysis for State Street's exchange-traded fund products.

The coronavirus, which originated in the Chinese city of Wuhan, has now killed more than 170 people and infected more than 8,200 in 16 countries. The spread of the flu-like disease has spooked some U.S. investors as large multinationals such as Disney, Starbucks and American Airlines suspended their operations in China in response.

Speaking at Inside ETFs, the world's biggest exchange-traded fund conference, held in Hollywood, Florida, Bartolini said the bullish sentiment was intact even before the outbreak.

"Everyone sort of had that fear of missing out" at the start of 2020, Bartolini said, adding that it led investors to start "buying into sectors," driving sector ETF inflows to a January record of $7 billion.

"Then, over the last few days or so, we started to see a little trepidation going into the marketplace because of the coronavirus, and a lot of the knee-jerk reaction was around the denting of growth expectations, particularly in China, which is now more of a consumption-led economy," Bartolini said.

But that hasn't stopped investors from flocking to some key S&P sectors that are particularly sensitive to U.S.-China trade tensions, which have eased since the two countries signed a "phase one" deal into effect earlier this month, he said.

"You've seen massive flows in industrials, materials. Everyone's still piling into tech because that's just the momentum trade of the moment right now," Bartolini said.

Those trades are largely better than the panic-induced action other sides of the market are seeing, Dave Nadig, the chief investment officer of ETF Trends, said in the same "ETF Edge" interview.

"It's a terrible idea to start timing your ins and outs in the equity markets based on something happening half a world away," Nadig said, calling investors' decisions to sell on coronavirus developments "excuse management."

"People want an excuse to get out of the market," he said. "If you were already feeling a little touchy, this was the time to go [and] buy ... gold."

But Josh Brown, the CEO of Ritholtz Wealth Management and a CNBC contributor, said he doesn't think the defensive positioning is particularly damaging to the overall market layout.

"When I'm looking at the markets and what they did [on Monday], I really don't see any signs of, like, this mass exodus of funds out of stocks," he said in the same "ETF Edge" interview.

"I do see, though, something interesting happening, which is money moving into gold, money moving into bitcoin, money moving into nontraditional things that I suppose people are using as a hedge against worse headlines for coronavirus," Brown said. "So, we'll see how long that plays out."

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