The traditionally recession-proof sector has been led this year by domestically focused food companies
The way markets typically function is that when demand rises, prices rise, and that motivates producers to increase supply. WSJ’s Dion Rabouin explains why the age-old economics equation about supply and demand isn’t working right now. Illustration: David FangWhen times get tough, American investors look to everyday consumer goods to lend some stability to their portfolios.
Demand for so-called consumer staples, or household essentials like groceries and cleaning supplies, tends to be more resilient than for more discretionary items like clothes or electronics, let alone big-ticket items like cars. This proved largely true as inflation hit consumer budgets in 2022. The S&P 500 consumer staples subindex is down just 2.7% for the year, compared with a 37% decline in the consumer discretionary subindex and a 19% decline for the broad S&P 500.
This is not only a safer buy compared to NASDAQ, or Dow type stocks, but is the market where giants have and will be made.
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