Over the past few weeks, the stock market has been experiencing stomach-churning volatility due to various macroeconomic concerns. This is evident in the CBOE Volatility Index’s 74.9% increase year-to-date. U.S. GDP declined 1.4% in the first quarter, and the consumer price index increased 8.3% year-over-year in April, exceeding the 8.1% estimate. Therefore, a more hawkish Fed stance is expected to bring down multi-decade high prices. And analysts do not expect the Fed will be able to do that without pushing the economy into a recession. Combined with the continuing geopolitical issues, these factors are expected to keep the market extremely volatile in the near term.
Since uncertainties prevail in the broader market, it could be wise to invest in low-beta stocks to cushion one’s portfolio against volatile market conditions. That’s because securities possessing low betas are less sensitive to broader market fluctuations.
