The winter months were incomparable for the stock market, making it hard to believe that there won’t be any profit-taking ahead of the historically weaker summer months. The Stock Traders Almanac’s “sell in May and go away” thesis highlights that the period from May through October is the worst for investors to put money in the equity market.

Most stocks generally trade within a narrow range during the summer months, and a breakout to the upside is few and far between. The Dow Jones Market Data added that the S&P 500, since 1928, has registered an average gain of 5.2% from November to April, while it has posted a meager gain of 2.1% from May to October.

May is here, and the S&P 500 already ended in the red in the first trading session. Interestingly, the broader index tumbled in April and snapped a five-month winning streak. The index also recorded its worst monthly return in April since September, sliding 4.2%.

So, what’s behind the stock market waning that could further weigh on stocks? The Federal Reserve’s favored inflation gauge, the personal consumption expenditures price index, increased 2.7% year over year in March and 0.3% sequentially. The incessant uptick in home and other service prices remained a nightmare for consumers.

Sticky inflation, thus, dampened hopes of an interest rate cut soon. Elevated interest rates jack up borrowing costs, affect consumer spending, dent economic growth and cause gyrations in the stock market. Many market pundits are now projecting fewer rate cuts this year and expect inflation to move sideways rather than down toward the Fed’s target of 2%.

Talking about the economy, GDP, for the first quarter, increased at an annualized pace of 1.6%, less than the expectation of an increase of 2.4%. Both government and consumer outlays cooled amid a pickup in price pressures.

What’s more, consumers aren’t feeling self-assured about the condition of the labor market and their outlook for the economy worsened. After all, the Conference Board’s consumer confidence index slumped to its lowest level in April since mid-2022.

But despite these discouraging developments along with the unrest in the Middle East, investors shouldn’t shun equities completely! Instead, market participants should place their bets on stocks such as NNN REIT, Inc. (NNN Quick QuoteNNN - Free Report) , Getty Realty Corp. (GTY Quick QuoteGTY - Free Report) and Frontline plc (FRO Quick QuoteFRO - Free Report) since these can provide a steady income during the unpleasant summer months.

These stocks have a low beta (ranges from 0 to 1), making them immune to market upheavals. They also provide dividends, implying a stable financial structure that helps them counter market volatility. Moreover, the stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

NNN REIT invests primarily in high-quality retail properties. The company has a beta of 1.

NNN has a dividend yield of 5.6%. The Zacks Consensus Estimate for its current-year earnings has moved up 0.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 2.5%.

Getty Realty is engaged in the ownership, leasing and financing of retail motor fuel and convenience store properties. The company has a beta of 0.88.

GTY has a dividend yield of 6.6%. The Zacks Consensus Estimate for its current-year earnings has moved up 0.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 2.7%.

Frontline plc is a shipping company, currently with a beta of 0.03.

FRO has a dividend yield of 6.3%. The Zacks Consensus Estimate for its current-year earnings has moved up 10.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 17.5%.

Shares of NNN REIT, Getty Realty and Frontline have gained 15.8%, 39.1% and 59.1%, respectively, in the past decade.
 

Image Source: Zacks Investment Research