The major benchmark stock indexes have entered correction territory, owing to rising concerns over high inflation, growing tensions in Ukraine, and the Federal Reserve’s decision to hike interest rates in March 2022. The tech-heavy Nasdaq Composite, which is interest-rate sensitive, has declined 4.3% over the last five trading days to close yesterday’s session at $13,542.12, down 16.5% from its all-time high of $16,212.23.
Because experts expect the tech sell-off to continue, we think it could be wise to bet on dividend-paying consumer defensive stocks to hedge one’s portfolio. Inelastic product demand helps consumer defensive companies to exhibit resilience amid an inflationary environment. Therefore, the consumer defensive industry typically withstands a market correction better than many industries.
