Blue-chip companies are typically industry leaders with strong financials and cash balances, which affords their stock some stability even during an economic downturn. Such businesses have pricing power and are considered safe investment bets amid market volatility.
Last month, the major market indexes suffered wild price swings, which resulted in the Dow Jones Industrial Average (DJIA) slipping 3.3% in January. The S&P 500 and the Nasdaq 100 fell 5.3% and 8.9%, respectively, marking their worst monthly performance since March 2020. The volatility in January was due largely to the Fed’s decision to increase interest rates multiple times this year and rising geopolitical tensions. According to BofA Securities’ U.S. head of equity and quantitative research, Savita Subramanian, “It’s going to be a year where we are shocked by the volatility.” But blue-chip companies have a long track record of providing attractive returns and a regular flow of income in the form of dividends.
