Investors seeking out consistency

NEW YORK – In the span of only a few days, Wall Street went from worrying about accelerating inflation and higher interest rates to fears of deteriorating profits and an economic slowdown.

The resulting gyrations in stocks have some professional investors wondering as they cope with what many are calling a shift away from commodity-driven issues toward less-loved areas of the market, such as health care and consumer staples – the least-damaged sectors.

“The shift from a cyclical, almost inflation-driven mindset to one that is defensive with slower growth has put the commodity producers in the leadership role to the downside,” said Ned Riley, chief investment officer of Riley Asset Management in Boston. “That masks the fact that the companies with more stable growth, that are less dependent on price increases, are going to eventually be the market’s new leadership.”

It was an excruciating week for stocks. At the root of some of the market’s anxiety is the thought of less-robust growth in consumer spending, illustrated by disappointing retail sales for March. This was partly chalked up to fuel costs. But even the sagging price of oil, now trading at a two-month low, failed to reassure investors, who remained firmly focused on their fears of slower growth for the rest of 2005.