Consumer Sentiment Hits 15-Month Low: 5 Low-Beta Defensive Picks

Economic Overview - Consumer confidence in the economy has decreased, attributed to rising inflation and fears of a global trade war due to proposed tariffs by President Trump [1][4] - The University of Michigan Consumer Sentiment Index fell to 64.7 in February from 71.7 in January, marking a 15-month low [4] - The five-year inflation outlook increased to 3.5%, the highest since 1995, up from 3.2% in January [4] Inflation Data - The Consumer Price Index (CPI) rose 0.5% in January, following a 0.4% increase in December, exceeding analysts' expectations of a 0.3% rise [5] - Year-over-year, CPI increased by 3% in January, compared to a 2.9% rise in December, marking the largest annual gain since April 2024 [6] - Core CPI, excluding food and energy, rose 0.4% sequentially in January after a 0.2% increase in December [6] Federal Reserve and Tariff Concerns - The Federal Reserve maintained interest rates in January and indicated fewer rate cuts in 2025, raising concerns about a delay in the next rate cut [7][8] - Market expectations for a rate cut in May are unlikely, with a potential delay until the second half of the year [8] - Trump's tariffs, including a 25% tariff on pharmaceuticals, automobiles, and semiconductors, have heightened consumer concerns about the economy [9][10] Defensive Investment Recommendations - Utilities and consumer staple stocks are recommended as defensive investments amid economic uncertainty [2] - Pinnacle West Capital Corporation (PNW), NiSource Inc. (NI), Atmos Energy Corporation (ATO), Tyson Foods (TSN), and Molson Coors Beverage Company (TAP) are highlighted as strong picks, each with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) [2] - These stocks are characterized as low-beta (beta < 1) with high dividend yields, making them suitable for cautious investors [3] Company Profiles - Pinnacle West Capital Corporation (PNW): Expected earnings growth rate of 16.3%, Zacks Rank 2, beta of 0.57, dividend yield of 3.91% [13] - NiSource Inc. (NI): Expected earnings growth rate of 9.1%, Zacks Rank 2, beta of 0.54, dividend yield of 2.80% [15] - Atmos Energy Corporation (ATO): Expected earnings growth rate of 5.1%, Zacks Rank 2, beta of 0.72, dividend yield of 2.32% [17] - Tyson Foods (TSN): Expected earnings growth rate of 22.6%, Zacks Rank 2, beta of 0.80, dividend yield of 3.31% [19] - Molson Coors Beverage Company (TAP): Expected earnings growth rate of 6.5%, Zacks Rank 1, beta of 0.85, dividend yield of 2.92% [21]