Among the Sectors SPDRs —the best market proxy for sector rotation strategies — Consumer Staples (XLP), Consumer Discretionary (XLY), Utilities (XLU), and Industrials (XLI) all saw fresh all-time highs this week, with the Health Care SPDR (XLV) hitting its highest level since 2015. Even the Retail SPDR (XRT) had its best day of 2017.

But in May, instead of a mix of winning and losing sectors, it was a month of little interest in U.S. stock sector bets. Only Consumer Discretionary took in any notable flows — $258 million. The Financial Select Sector SPDR (XLF) saw outflows of $761 million; followed by Technology (XLK), with outflows of $526 million; Consumer Staples, with outflows of $283 million; and Utilities (XLU), with outflows of $249 million.

“It’s notable that only XLY [Consumer Discretionary] of the 10 sectors saw [real] inflows. Investors are not using these products as tactically as they have historically,” Rosenbluth said. “There’s usually net inflows to a handful of sectors, a rotation, and it appears as if investors are going more diversified with their approach in U.S. equities.”

Some of XLY’s top holdings have done well in the past month after better-than-expected earnings. It has more than a 15 percent allocation to Amazon, up more than 6 percent, along with some other top portfolio stocks — Comcast (6.5 percent), McDonald’s (8.8 percent) and Starbucks (6.5 percent).

Mishra said the ongoing political drama in Washington may lead investors to favor larger companies with higher overseas revenue exposure, and these companies have been significantly outperforming smaller, domestically focused companies this year.

“Investors have just been cautious about U.S. stocks. … Investors are just waiting for a new catalyst,” Mishra said.

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