Defensive Stocks for Market Downturns and Volatility

The S&P 500 fell 1.4% last week as Treasury bond yields climbed, prompting investors to seek defensive equities that have historically bucked broad market downtrends [3]. While the index remains near all-time highs, the recent drawdown has renewed focus on "bearproof" stocks—companies in essential sectors that maintain steady demand regardless of economic conditions [1, 4].

Identifying resilient sectors

Market analysts often point to consumer staples, utilities, and healthcare as sectors that provide defensive exposure during periods of stress [1]. These industries benefit from inelastic demand, meaning consumers continue to purchase their products and services even when broader economic activity slows [1, 4].

Recent data from CNBC Pro, which screened the last three years of S&P 500 performance, identified three specific names that frequently posted gains during the index’s worst sessions: Kroger, Southern Company, and Cboe Global Markets [3]. Kroger, a grocer, was positive in nearly 70% of sessions where the S&P 500 saw a significant decline [3]. Southern Company, a utility provider, rose in 63% of those same sessions, while Cboe Global Markets, a financial technology firm, was positive 75% of the time [3].

Analyst expectations and market context

While these stocks have historical track records of resilience, they are not immune to broader market sentiment. Kroger, for instance, has dropped more than 7% in 2026 and is currently on track for its first losing year in four [3]. Despite this, analysts maintain a bullish outlook, with consensus price targets forecasting a 26% gain over the next 12 months [3].

Similarly, Southern Company has underperformed the broader market in 2026, adding 2% compared to the S&P 500’s 12% advance, though analysts anticipate a 10% jump ahead [3]. Cboe Global Markets has fared better, jumping nearly 20% in 2026 and tracking toward its fourth consecutive winning year, with analysts projecting an additional 6% upside [3]. Other established names, such as Walmart and McDonald's, have also been cited for their ability to generate positive or near-zero returns during past crashes like those in 2008 and 2022 [5].

What to watch

• Treasury Yield Movements: Monitor the trajectory of bond yields, which have recently pressured equity valuations and contributed to market volatility [3].
• Debt Buyback Impact: Observe the effectiveness of the Treasury’s debt buyback program in stabilizing the bond market and tempering the rise in national debt concerns [3].
• Dividend Sustainability: For investors focused on long-term holding, track the dividend growth of "Dividend Kings"—companies that have increased annual payouts for at least 50 years—as a potential buffer against price volatility [4].

While historical resilience provides a framework for identifying defensive stocks, it does not guarantee future performance. As market conditions evolve, the focus remains on whether essential goods and services can continue to anchor portfolios if the current index drawdown deepens into a sustained downturn [1, 4].