Markets Turn Volatile: 5 Defensive Stocks to Buy

Core Viewpoint - Volatility has returned to Wall Street following a solid September rally, influenced by a Federal Reserve rate cut and recent inflation data, leading to a recommendation for defensive stocks like consumer staples and utilities [1][2]. Inflation Data - The consumer price index (CPI) rose 0.2% in September, matching August's increase and exceeding analysts' expectations of 0.1% [2] - Year-over-year, CPI increased 2.4%, marking the smallest rise in over three and a half years [2] - Core CPI, excluding food and energy, jumped 3.3% year-over-year, surpassing the consensus estimate of 3.2% [2] - The Federal Reserve cut rates by 50 basis points, with the current benchmark rate between 4.75% and 5%, the lowest since April 2023 [2] Consumer Sentiment - The University of Michigan's preliminary consumer sentiment reading fell to 68.9 in October from 70.1 in September, below the forecast of 70.8 [3] - One-year inflation expectations rose to 2.9% from 2.7% in the previous month, reflecting concerns over high prices and a slowing economy [3] Investment Strategy - Investors are advised to focus on low-risk investments, particularly defensive stocks in consumer staples and utilities, with an emphasis on low beta stocks (0 to 1), high dividend yields, and favorable Zacks Rank [4] Company Highlights - American Water Works Company, Inc. (AWK): Serves over 14 million customers, expected earnings growth rate of 7.6%, Zacks Rank 2, beta of 0.69, dividend yield of 2.18% [5] - Ameren Corporation (AEE): Provides electricity and natural gas to nearly 2.4 million electric and over 900,000 natural gas customers, expected earnings growth rate of 5.5%, Zacks Rank 2, beta of 0.45, dividend yield of 3.07% [6] - Fortis, Inc. (FTS): Engaged in electric and gas utility business, expected earnings growth rate of 3.1%, Zacks Rank 2, beta of 0.44, dividend yield of 3.92% [8] - Unilever PLC (UL): Manufactures branded consumer goods, expected earnings growth rate of 8.2%, Zacks Rank 1, beta of 0.48, dividend yield of 2.99% [9] - The Clorox Company (CLX): Produces consumer products, expected earnings growth rate of 7.6%, Zacks Rank 2, beta of 0.41, dividend yield of 3.02% [10]