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Fretting Over S&P 500's Worst Day in a Month? Here're 5 Safe Stocks

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At the beginning of the week, things were pretty hunky-dory for the stock market. After all, on Aug 16, bulls overpowered bears on Wall Street and helped the broader S&P 500 make a noteworthy comeback. At one point on Monday, the index slipped 0.7% but managed to end the trading session in the green, with a 0.3% uptick. In fact, this was the broad-market index’s biggest comeback since Mar 25, per Dow Jones Market Data, citing a MarketWatch article.

Of course, investors were convinced that the gradual reopening of the economy, progress in the health crisis, and an array of government stimulus measures are enough to help the economy going in the near future, especially after the drubbing it took last year due to the coronavirus pandemic. However, a series of disappointing developments dented investors’ sentiments lately and dragged the stock market down on Aug 17. The S&P 500 index slumped 0.7% during yesterday’s trading session, which in reality was the sharpest daily drop since Jul 19, as mentioned in another MarketWatch article.

So, what led to the halting of the S&P 500’s five-day run of record highs? Just when you thought that the impact of COVID-19 across the globe is subsiding, New Zealand announced a nationwide lockdown after a new coronavirus case showed up in one of its cities. Coronavirus-related issues have also crept up at China’s ports. In the United States, the highly-transmissible delta variant of coronavirus is already spreading at places where vaccination rates are low, while hospitalization rates have started to increase. No doubt, such new cases of coronavirus threaten economic growth worldwide, something that doesn’t bode well for the stock market.

Speaking about economic growth, in the United States particularly, retail sales numbers disappointed lately raising concerns that U.S. consumers may be starting to reduce their spending levels on concerns about further economic progress. Citing a Barron’s article, sales at U.S. retailers for the month of July dropped 1.1%, way more than economists’ expectations of a drop of 0.3%.  Retail sales, by the way, largely took a hit due to a decline in car-buying. It’s widely believed that consumers’ spending on big-ticket items has been partly dampened by the spread of the delta strain of COVID-19 and its subsequent impact on the economy.

Elsewhere, in countries like China, economic growth has already slowed down. Alarmingly, online shopping, retail sales and industrial output took a beating in China, and it’s not solely because of the spread of the virus. Moreover, China’s recent crackdown on Internet majors like Alibaba and Baidu isn’t lifting investors’ spirits in any way. There is also political unrest in places like Afghanistan and that may have repercussions across the globe, leading to a volatile stock market.

However, investors shouldn’t shun equities completely. On the contrary, it is prudent to invest in low-risk assets at times of uncertainty. Thus, invest in low-beta stocks and those that provide dividends since they exhibit immense financial strength. Additionally, if the stocks are non-cyclical in nature, market vagaries won’t hurt them. These stocks are generally found among consumer staples and utility sectors. We have, thus, selected five stocks that fulfill the above criteria and boast of a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

California Water Service Group (CWT - Free Report) is the third largest investor-owned water utility in the United States. The company has a beta of 0.14 and a Zacks Rank #2. It has a dividend yield of 1.4%. 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 next quarter and year is 12.9% and 4.5%, respectively.

Middlesex Water Company (MSEX - Free Report) treats, stores and distributes water for residential, commercial, industrial and fire prevention purposes. The company has a beta of 0.31 and a Zacks Rank #2. It has a dividend yield of 1%. The Zacks Consensus Estimate for its current-year earnings has moved up 0.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 4.1%.

Albertsons Companies, Inc. (ACI - Free Report) provides retail food products. The company has a beta of 0.03 and a Zacks Rank #2. It has a dividend yield of nearly 1.4%. The Zacks Consensus Estimate for its current-year earnings has moved up 14.1% over the past 60 days. The company’s expected earnings growth rate for the next five-year period is 12%.

Inter Parfums, Inc. (IPAR - Free Report) is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products. The company has a beta of 0.92 and a Zacks Rank #1. It has a dividend yield of almost 1.4%. The Zacks Consensus Estimate for its current-year earnings has moved up 13.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 61.2%.

J & J Snack Foods Corp. (JJSF - Free Report) is an American manufacturer, marketer, and distributor of branded niche snack foods and frozen beverages. The company has a beta of 0.58 and a Zacks Rank #2. It has a dividend yield of 1.5%. The Zacks Consensus Estimate for its current-year earnings has moved up 23.6% over the past 60 days. The company’s expected earnings growth rate for the current year is almost 164%.