Real estate stocks are the hot defensive play for investors on Thursday as regional banks continue their selloff a day after the Federal Reserve hinted at a potential pause in its interest rate-hike campaign.

Of the S&P 500 Index’s 11 major industry groups, only two are in the green this session. A gauge of real estate stocks is outperforming the broader market Thursday, up as much as 1.5%, with utilities trailing closely behind. The S&P 500 falls as much as 1.5%.

Renewed concerns about regional banks have also caused a flight to safety in the bond market. That’s causing lower yields, and sectors like real estate and utilities stand to benefit, Matt Maley, chief market strategist at Miller Tabak + Co., said.

The S&P Composite 1500 Real Estate Index rises as much as 1.4%, with real estate investment trusts on the climb. Meanwhile, the two-year Treasury yield slumped to 3.7%.

Investors are still digesting the balance of a likely Fed pause with what that could mean for the broader economic outlook, said Lauren Goodwin, economist and portfolio strategist at New York Life Investments.

“The very cause of the economic slowdown — higher interest rates — is also an important source of investor return, though,” she said. “For years, investors have had to rely dominantly on price appreciation to add portfolio value. Now, the income generation aspect of portfolio construction is back.”

The change in macro environment and ongoing price action serves as an opportunity for investors to rebalance for the moderate inflation and interest-rate backdrop that the market expects is ahead, she added. 

This article was provided by Bloomberg News.