The optimism surrounding the economy’s health that was seen at the beginning of the year is fast fading. Rising inflation and slowing GDP growth have raised concerns over the future of the economy, hurting the confidence of Americans.

The Conference Board said on Apr 30 that consumer confidence fell to 97 in April, declining for the third straight month to hit its lowest level since July 2022. This follows a downwardly revised 103.1 in March. Economists had predicted consumer confidence level to remain little changed at 104 in April.

Besides, the Present Situation Index, which is a gauge of consumers’ assessment of current business and labor market conditions, fell to 142.9 in April from 146.8 a month earlier.

Also, the Expectations Index, which measures consumers’ short-term outlook for income, business, and labor market conditions, fell to 66.4 in April from March’s upwardly revised level of 74. Any reading below 80 signals an ensuing recession.

The Conference Board said that consumer confidence is being dented as people are becoming less positive about the current labor market situation. Although job openings and job additions have declined from the year-ago levels, the labor market continues to be resilient.

Also, inflation has resumed its climb this year after declining sharply in 2023. The consumer price index (CPI) rose 3.5% year over year in March. This has raised uncertainty over the Federal Reserve’s planned rate cuts as many believe that it could get delayed further.

Also, GDP grew a modest 1.6% in the first quarter after rising 3.4% in the final quarter of 2023.

These have been making markets volatile, which could continue for a longer period or at least till investors get a clearer picture of the Federal Reserve’s future course of action.

Our Choices

Given this situation, it would be wise to invest in defensive stocks like utilities and consumer staples. Five such stocks are Atmos Energy Corporation (ATO Quick QuoteATO - Free Report) , California Water Service Group (CWT Quick QuoteCWT - Free Report) , Pinnacle West Capital Corporation (PNW Quick QuotePNW - Free Report) , Colgate-Palmolive Company (CL Quick QuoteCL - Free Report) and McCormick & Company, Incorporated (MKC Quick QuoteMKC - Free Report) .

Also, these belong to the category of low-beta stocks (beta greater than 0 but less than 1). Hence, the recommended approach is to invest in low-beta stocks with a high-dividend yield and a favorable Zacks Rank.

Atmos Energy Corporation, along with its subsidiaries, is engaged in the regulated natural gas distribution and storage business. ATO serves nearly 3.4 million customers in more than 1,400 communities in eight states, from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energyoperates more than 72,000 miles of transmission and distribution lines as well as 5,700 miles of interstate pipelines.

Atmos Energy has an expected earnings growth rate of 8.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. ATO presently has a Zacks Rank #2. Atmos Energy has a beta of 0.66 and a current dividend yield of 2.73%.

California Water Service Group is one of the largest investor-owned water utilities in the United States. CWT has six subsidiaries — California Water Service, Washington Water Service Company, New Mexico Water Service Company, Hawaii Water Service Company, CWS Utility Services and HWS Utility Services.

California Water Service Group has an expected earnings growth rate of 214.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 27.1% over the last 60 days. CWT currently carries a Zacks Rank #1. California Water Service Group has a beta of 0.47 and a current dividend yield of 2.28%.

Pinnacle West Capital Corporation provides electricity services (wholesale or retail) in the state of Arizona through its subsidiaries. PNW is involved in the generation, transmission and distribution of electricity from coal, nuclear, gas, oil and solar.

Pinnacle West Capital Corporation’s has an expected earnings growth rate of 7.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3% over the last 60 days. PNW currently carries a Zacks Rank #2. Pinnacle West Capital Corporation has a beta of 0.48 and a current dividend yield of 4.78%.

Colgate-Palmolive Company’s business strategy closely defines efforts to increase its leadership in key product categories through innovation in core businesses, tracking adjacent categories’ growth and expansion into new markets and channels. Due to the shift of consumer preference to organic and natural ingredients, CL is expanding its Naturals range, including Naturals toothpaste.

Colgate-Palmolive Company has an expected earnings growth rate of 9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 60 days. CL presently has a Zacks Rank #2. Colgate-Palmolive has a beta of 0.40 and a current dividend yield of 2.18%.

McCormick & Company, Incorporated is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors to the entire food industry across the globe. MKC’s key sales, distribution and production facilities are located in North America and Europe.

McCormick & Company’s expected earnings growth rate for the current year is 5.6%. The Zacks Consensus Estimate for the current-year earnings has improved 0.4% over the past 60 days. MKC currently has a Zacks Rank #2. McCormick & Company has a beta of 0.73 and a current dividend yield of 2.21%.