Friday brought on major selling in the stock market, with the Dow Jones industrials down over 400 points and the S&P 500 down almost 50 points earlier in the day. The plunge is driven by weak economic readings in the United States and abroad, and recession fears from the dreaded inverted Treasury yield curve. Unfortunately, the mainstream and financial media alike love reporting about how the next recession is right around the corner. It doesn’t seem to matter if that’s not exactly true. The reality is that Friday’s big sell-off was long overdue after the Dow and S&P 500 had recovered in the double-digit percentages so far in 2019.
24/7 Wall St. already has evaluated the “why” about Friday’s selling, and investors always have to remember to be opportunistic when they need to. Despite our jaded view of financial news coverage these days, the reality is that the sell-off could easily continue to gain steam in the coming days and weeks. A lot has to do with trade woes, but the international situation is far more cautious than the domestic situation, without even considering any trade wars and tariff woes.
During times of uncertainty and fear, many investors have to look for a place to hide when they know that they have to keep having income from investments to supplement their income, retirement or financial planning needs. This is when investors have to look for stable and defensive stocks that will hold up in bad times and still do well in good times.
There will be another recession one day, but all the available data today just doesn’t show it as a real risk for the coming months, even if the slower economic growth may feel weak. Media forecasts for the next recession seem to be very far ahead of market gurus and economists who just evaluate the raw numbers and data.
A news search of Google Trends indicates that the term “recession” saw a sharp rise in interest on the web on March 22. Another term that saw an even larger surge in Google Trends was “inverted yield curve.”
With multiple financial stories calling the recession lights and indicators as flashing red, they are really referring to the flat yield curve turning into an inverted yield curve. This is where short-term interest rates are higher than intermediate and long-term interest rates. Market participants often consider that a recession indicator because the Federal Reserve has short-term interest rates higher than the long-term growth prospects would indicate — and it also can imply that the Fed has overshot to the upside on its rate hikes that ended at the end of 2018.
Since it is already a foregone conclusion that investors have to keep at least some money in stocks for dividends and long-term appreciation, we have offered a view of 15 stable and defensive stocks and investments outside of bonds that will hold up if the market selling persists for days or weeks. They might not exactly rally in bad markets, but they should take less of a beating than the market if they act normally.
The list includes the most recent share prices, a 52-week trading range, and the current dividend yield on each company. We also have included information about each company’s history, revenue or the size of its customer base. Expected revenue figures are from Thomson Reuters.
Investors should always consider that there are no assurances that defensive stocks will hold up in a down market. If the market loses 10% or 20% of its value in a short period, it tends to hurt most equities, although defensive stocks might hurt less. Here are 15 top defensive stocks that investors are likely to pour money into if they become worried about the next selloff turning into a major correction or even a bear market.