Defensive Stocks Will Be a Haven as Recession Looms
- Utilities, staples, health care outperform broader market YTD
- Defensives beat even as their profit outlook lags cyclicals
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Defensive stocks have fared better than their cyclical counterparts during this year’s bear market despite having a dimmer profit outlook. As the economy slows further amid aggressive central bank tightening, they’re still seen as investors’ safest bets heading into that environment.
Utilities, consumer staples and health care have outperformed most S&P 500 sectors this year, besides energy, which continues to benefit from higher oil prices. As recession concerns grow, investors typically look to add exposure to these industries that are expected to show resiliency during a downturn.