Tuesday’s market sell-off sticks out like a sore thumb amid this year’s rally to all-time highs, leaving traders to wonder if it could be the start of a bigger downtrend. Here’s how investors can play defense and generate income. The three major indexes all slid more than 1% each on Tuesday. That marks a turn from the strong first quarter, during which nearly two out of every five trading days pushed the benchmark S & P 500 to a record close, according to Bespoke Investment Group. Recent data suggesting continued strength in the economy can be a double-edged sword for markets, said Larry Tentarelli, founder of the Blue Chip Daily Trend Report. While a robust economy is good for stocks in the long term, the data can catalyze volatility in the short term as it adds uncertainty to how, or if, the Federal Reserve will move interest rates. “If the economy is strong, it should be a positive,” he said. “But in the near term, it’s just putting some pressure on on the stock market.” In the event Tuesday’s drop is a sign of more pain to come, steady income-paying stocks may allow investors to play some defense in their portfolios. CNBC Pro screened for defensive names that can offer dividend income. To find these stocks, we used the screener tool available to CNBC Pro subscribers to find equities with the following qualities: Trading up on Tuesday despite the broader market retreat A beta of less than 0.9, meaning the stock is less volatile than the overall market A dividend yield above 1% An average price target from Wall Street analysts implying upside of 5% or more Here’s the stocks that passed CNBC Pro’s screen: PRO readers can save and tweak this screen in their screener tool here . Several utilities made the list. The sector is up about 3% year to date, far underperforming the overall S & P 500. However, utilities and energy are the sole positive sectors in Tuesday’s selloff. Sempra is one of the utility stocks in the screen, and analysts see sizable upside potential. While the stock has slid nearly 4% so far this year, the typical analyst anticipates a gain of more than 15% over the next year. Three out of every four analysts polled by LSEG have a buy or strong buy rating on the stock. VZ .SPX YTD mountain Verizon vs. the S & P 500, year to date Verizon has climbed more than 12% thus far in 2024, outperforming the S & P 500. Analysts are divided on the telecom stock, with the majority either in the camps of having buy or hold ratings. But the average price target on the Street sees more room to run, with a price target implying more than 5% in upside. And Verizon pays a 6% dividend.
Playing defense with steady stocks that generate income if this sell-off is something bigger
Apr 2, 2024
