By carefully selecting this particular type of stocks, investors may find a reliable shelter from the storm of unpredictability in the financial landscape. This strategic move could potentially provide a cushion against the ups and downs of the market, offering a more stable investment option during times of heightened volatility.Amid escalating tensions surrounding President Donald Trump's tariffs, investors are seeking refuge in certain stocks that offer stability in the face of ongoing uncertainty.
According to Piper Sandler, the recent market downturn triggered by Trump's decision to impose tariffs on goods from Canada, Mexico, and China has left investors wary of the future. The unpredictability of Trump's tariff policies has created a sense of unease in the market, reminiscent of the selloff in the fourth quarter of 2018 when investors were displeased with Powell's policy direction.
Market Reacts to Trump's Tariff Announcements
All three major stock market indexes closed lower last week following President Trump's declaration of new tariffs on goods from Canada, Mexico, and China. This news caused a significant downturn in the market, leading to the worst week for stocks since September.
Piper Sandler recommends investors focus on stocks with strong fundamentals and lower risk profiles that can withstand market volatility. By conducting a screening process to identify companies poised to outperform in the current economic climate and positively correlated with U.S. corporate bond risk spreads, Piper has highlighted several stocks that stand out.
Analyst Insights on Market Response to Tariffs
Piper analyst Michael Kantrowitz pointed out that the current situation differs from previous market sell-offs as the unpredictability of Trump's tariff decisions adds a new layer of uncertainty. Kantrowitz advised investors to focus on stocks with strong fundamentals and lower risks to weather the storm.
One such stock is Kroger, a food retailer whose shares surged nearly 5% on Friday, reaching a new 52-week high. Kroger's strong performance is attributed to its robust fundamentals and positive outlook, with the company forecasting annual same-store sales above analysts' expectations. Similarly, Dollar General, a discount retailer based in Nashville, has been identified as a stock that could weather the storm of Trump's tariffs. Dollar General's shares rose over 7% on Friday, reflecting investor confidence in the company's resilience.
Piper's Stock Screening Criteria
To identify resilient stocks, Piper conducted a screening process to find companies that could potentially outperform in the current economic landscape and have a positive correlation with U.S. corporate bond risk spreads.
Another company worth mentioning is the oil and gas producer Hess, which saw a 3% increase in its stock price on Friday. Hess's solid performance, with a macro select score and corporate bond risk spread score of 2, underscores its ability to navigate the current economic landscape effectively.
Kroger Emerges as a Strong Performer
Kroger, a food retailer, saw its stock price rise nearly 5% on Friday, reaching a new 52-week high. The company's strong performance was supported by optimistic sales forecasts and positive analyst sentiment.
Overall, in a climate of heightened market volatility driven by uncertainty over Trump's tariff policies, investors are turning to stocks like Kroger, Dollar General, and Hess for stability and potential long-term growth. By focusing on companies with strong fundamentals and lower risk profiles, investors can position themselves to weather the storm and capitalize on opportunities in the market.
Dollar General's Resilience to Tariffs
Dollar General, a discount retailer, was highlighted by Piper and Morgan Stanley as a stock that could withstand the impact of Trump's tariffs. The company received high scores on Piper's screening criteria and experienced a notable increase in its stock price.
Heightened tensions surrounding President Donald Trump's tariff policies have been impacting the market recently, but according to Piper Sandler, there are certain stocks that could offer investors a safe haven amidst the ongoing uncertainty.
Hess Identified as a Potential Winner
Hess, an oil and gas producer, was also singled out by Piper's screening process as a stock with favorable macroeconomic and risk spread scores. Despite fluctuations in its stock price, Hess has shown resilience compared to the broader market.
