XLU - 3 Utility Stocks to Buy With Rate Cuts on the Horizon | Benzinga
Demand for defensive stocks is not affected much when markets are volatile because of the very nature of the stocks. Even during the 2008 financial crisis, they had not faltered. Utility stocks are examples of such defensive instruments that protect investments when the goings are not good. Whatever the state of the economy, a household or a business needs its electricity, water, or gas supplies.
The sector is known to offer investors a steady dividend income coupled with less price volatility relative to the overall market. This makes the sector a fallback option for investors during recessions and economic downturns. Alternatively, utility stocks usually fall out of favor during times of economic growth, with growth stocks driving the markets.
Of late, investors have been apprehensive about the Fed delaying its promises of interest rate cuts. While it had promised a minimum of three rate cuts in 2024 earlier, currently, it expects a 25 bps cut in September to mark the first loosening of grip on monetary policy since tightening started in early 2022. The central bank wants ...