The major market indexes have faced tremendous selling pressure over the past few weeks on investor concerns over surging inflation and the Fed’s aggressive interest rate increases to tame it. Yesterday, the S&P 500 marked its worst day since June 2020, declining 4% to close the trading session at 3,923.68. The Nasdaq Composite and the Dow Jones Industrial Average also declined 4.7% and 3.6%, respectively, to settle at 11,418.15 and 31,490.07.
The consumer price index rose 8.3% in April, which was higher than the 8.1% estimate. This is close to the highest level in more than 40 years. Consumers generally reduce discretionary spending in a high inflationary environment. However, the consumer defensive sector typically sees stable demand for its products. Consumer defensive stocks are often good bets, especially during inflation, due to the near-inelastic demand for these companies’ products.
