The recent failure of two U.S. lenders has led many analysts to believe that the Federal Reserve might opt for a softer stance on rate hikes. However, one must remember that the Fed wants to achieve its long-term inflation target, and higher interest rate hikes might return as soon as the banking sector crisis eases.
Given this scenario, I believe it could be wise to invest in defensive stocks McDonald's Corporation (MCD), Elevance Health, Inc. (ELV), and The Kroger Co. (KR). Based on the inelastic demand for their offerings, these companies can maintain their profit margins even if the economy witnesses a recession.
