Warnings about credit challenges from Ally Financial on Tuesday could be the latest hint that the U.S. economy is drifting closer to a recession, but that doesn't mean it's time to rush into traditional defensive stocks. Lauren Goodwin, economist and chief market strategist at New York Life Investments, told CNBC that winning stocks are unlikely to fit neatly within defensive sectors at this point in the economic cycle.
"Quality" is an investing factor focused on measures of a company's financial strength, and those stocks can theoretically be found in any industry. Goodwin also said the election cycle can create some sector volatility between now and November as investors try to gauge how different outcomes could change policy in the years to come. Another thing for investors to consider is that some of the traditional defensive sectors have already been on an upswing.