Yesterday, U.S. stocks fell sharply amid fears over the key inflation data. The S&P 500 plunged 2.4%, while the Dow Jones Industrial Average tumbled 1.9%. Moreover, the market is severely worried about the Federal Reserve’s tighter monetary policy, skyrocketing oil prices, lingering supply chain issues, the raging war in Russia-Ukraine, and escalating recession risks. The former Fed vice chair hints at a 50% to 60% chance of a mild recession coming year.
Amid the current risk-off environment, the investors are drawn toward fundamentally sound wide-moat stocks. A company with a “wide moat” implies that it has a unique competitive advantage over its peers in its industry. Therefore, certain companies with solid earnings performance are more likely to withstand market downturns and uncertain times without a prominent effect on their businesses. The wide-moat stocks are held in the VanEck Morningstar Wide Moat ETF (MOAT). The ETF gained 1% over the past month, while the S&P 500 index declined over this period.
