5 Defensive Stocks With the Most Upside as Market Volatility Returns

Core Viewpoint - Wall Street is experiencing volatility due to disappointing economic data, particularly in the manufacturing sector, which has raised concerns about a slowing economy. Defensive stocks in utilities and consumer staples are recommended as safer investment options during this period of uncertainty [1][2][4]. Economic Overview - The manufacturing PMI rose slightly to 47.2 in August from 46.8 in July, indicating continued contraction as it remains below the neutral level of 50 for the fifth consecutive month [2][3]. - The manufacturing sector constitutes 10.3% of the economy, with notable contractions in industries such as machinery, textile mills, and transportation equipment [2]. Market Performance - On the first trading day of September, the Dow dropped 626.15 points (1.5%), the S&P 500 fell 2.1%, and the Nasdaq declined 3.3% [4]. - The Federal Reserve has raised interest rates to a 23-year high, which has contributed to slowing orders and output in factories [4]. Defensive Stocks Recommendations - American Water Works Company, Inc. (AWK): Provides water services to over 14 million customers, with an expected earnings growth rate of 7.4% and a current dividend yield of 2.14% [7][8]. - NiSource Inc. (NI): Delivers natural gas and electricity to nearly 4 million customers, with an expected earnings growth rate of 7.5% and a current dividend yield of 3.21% [10]. - Evergy, Inc. (EVRG): Supplies energy to over 1.7 million customers, with an expected earnings growth rate of 8.8% and a current dividend yield of 4.35% [12]. - Unilever PLC (UL): Engaged in manufacturing consumer goods, with an expected earnings growth rate of 8.2% and a current dividend yield of 2.92% [15]. - Flowers Foods, Inc. (FLO): Focuses on high-quality baked goods, with an expected earnings growth rate of 4.2% and a current dividend yield of 4.13% [17].