4 Utility Stocks With Upside to Navigate Market Volatility

Market Overview - Volatility has returned to Wall Street, disrupting the rebound following a significant selloff in early August, primarily due to fears over the economy's health triggered by disappointing jobs data [1][2] - September has historically been one of the worst months for stocks, which may prolong market volatility [4] Jobs Data Impact - The weak jobs data released indicated that private payrolls added only 99,000 jobs in August, the smallest increase since January 2021, and significantly below the consensus estimate of 145,000 [2] - Following the jobs report, the Dow declined by 0.5% and the S&P 500 shed 0.3%, marking the third consecutive session of decline for the S&P 500 [2] Manufacturing Sector - The manufacturing sector has been struggling, with the Institute for Supply Management (ISM) reporting a manufacturing PMI of 47.2 in August, indicating contraction as it is below the neutral level of 50 [3] - Higher borrowing costs have increased raw material costs and reduced demand in the manufacturing sector [3] Federal Reserve and Inflation - Inflation has decreased sharply but remains above the Federal Reserve's target of 2%, with expectations of a 25-basis-point rate cut this month [3] - The Federal Reserve has not yet clarified the magnitude or number of rate cuts planned for the year [3] Defensive Investment Recommendations - Given the current market conditions, investing in utility stocks is recommended as they are considered defensive in nature [1][5] - Suggested utility stocks include: - American Water Works Company, Inc. (AWK): Expected earnings growth rate of 7.4%, beta of 0.69, and a dividend yield of 2.12% [6][7] - American States Water Company (AWR): Expected earnings growth rate of 6.3%, beta of 0.49, and a dividend yield of 2.29% [9] - Evergy, Inc. (EVRG): Expected earnings growth rate of 8.8%, beta of 0.62, and a dividend yield of 4.27% [11] - OGE Energy Corp. (OGE): Expected earnings growth rate of 3.4%, beta of 0.74, and a dividend yield of 4.27% [14]