10 Defensive Stocks To Consider Buying As Experts Get Skittish
News Summary
As economic risks accumulate, experts are advising investors to shift towards defensive stocks to preserve capital. The Federal Reserve cut its benchmark rate by 0.25% in mid-September, with further cuts anticipated by the end of 2025, signaling economic weakening. The U.S. government shutdown, effective October 1, has halted federal funds and raised layoff concerns, intensifying market anxiety, particularly with the delayed release of the September employment report. Additionally, the Trump administration signaled new tariffs this week on items like timber and furniture, while consumer spending shows signs of slowing. Amidst this uncertainty, experts recommend several defensive investment areas, including integrated energy (e.g., Exxon Mobil, Chevron, TotalEnergies), retail (Costco), telecom (Verizon), utilities (WEC Energy), consumer staples (Colgate-Palmolive), and financial services (Chubb). Bonds are also seen as a safe haven, and certain real estate funds (e.g., AGNC Investment, Annaly Capital Management) are favored for their high dividends and potential benefits from rate cuts.
Background
In 2025, the U.S. economy faces multiple headwinds. The Federal Reserve's 0.25% rate cut in September, with expectations of further cuts by year-end, typically occurs amidst slowing economic growth or heightened recession fears. This was quickly followed by a U.S. government shutdown on October 1, which delayed critical economic data (like the September employment report) and raised the prospect of federal layoffs, thereby increasing market uncertainty and volatility. Furthermore, the Trump administration continues its protectionist trade policies, signaling new tariffs on specific goods this week, which could further disrupt global supply chains and pressure corporate earnings. Coupled with signs of slowing consumer spending, these factors create an elevated risk environment for investors, prompting a search for more defensive investment strategies.
In-Depth AI Insights
What are the deeper implications of the Trump administration's trade policy for defensive portfolios? New tariffs not only risk retaliatory measures from trade partners, escalating global trade tensions, but also directly impact U.S. companies' input costs and consumer prices. For defensive portfolios, this means: - Supply chain resilience is crucial: Companies with diversified supply chains less susceptible to specific tariffs will be more attractive. - Pricing power is key: Firms in sectors like consumer staples and utilities, possessing strong pricing power, can pass rising costs onto consumers, maintaining profitability. - Inflationary pressure and Fed policy: Tariffs can lead to higher import prices, exacerbating inflationary pressures. This could complicate the Fed's rate-cutting path, potentially causing it to waver between economic slowdown and inflation control, thereby affecting rate-sensitive defensive assets (like bonds and certain real estate funds). How does the