A 10% drop or at least a pause could be looming for the S&P 500. Take shelter in these sectors, says veteran strategist

A 10% drop or at least a pause could be looming for the S&P 500. Take shelter in these sectors, says veteran strategist

Legendary investor Warren Buffett told his faithful over the weekend that the U.S. economy is “red hot,” suggesting money in an index fund is better served than picking stocks. That advice comes as investors face what could be a seasonally weak period for equities.

The “sell in May and go away” adage dictates that from now to October is often a less profitable and more bumpy time for stocks, partly as the weather warms up and big traders spend more time vacationing, leaving behind junior traders and opening the door to volatility.

A stock hiatus doesn’t seem like a crazy idea right now. Hovering near all-time highs, the S&P 500

SPX, -0.72%

has gained for three straight months and the economy is indeed rebounding hard from the pandemic. And pent-up demand for a summer vacation and plenty of vaccines in the U.S., at least, justifies going away for a little while.

But instead of selling, “curb your enthusiasm” may be better advice to follow for the next six months, says our call of the day from Stifel’s head of institutional equity strategy, Barry Bannister. He predicts the S&P 500