Due to increasing concerns about the economic recession in the United States, market risk aversion is rising, and investors are eagerly seeking a &#34;safe haven&#34; for funds.
In recent weeks, the essential consumer goods sector in the United States has shown strength, with defensive stocks such as Coca Cola and Colgate becoming new favorites among investors.
<h2>Coca Cola and Colgate Shine</h2>
Year-to-date, Coca Cola's stock price has risen by about 20%, while Colgate has surged by over 30%. In the past month, the stock prices of retailers Walmart and Target, as well as consumer goods manufacturer Clorox, have risen by 14.8%, 9.1%, and 15.6% respectively, far exceeding the modest 4.5% increase in the S&amp;P 500 index during the same period.
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Irene Tunkel, Chief U.S. Stock Strategist at BCA Research, stated:
<blockquote>
&#34;Historically, defensive stocks like essential consumer goods perform well before the Federal Reserve cuts interest rates, which usually occurs when there is sufficient evidence of an economic recession. If market optimism returns, essential consumer goods will start to underperform.&#34;
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Last week, Morgan Stanley added Coca Cola and Colgate to its list of recommended stocks, advising clients to focus on &#34;companies that prioritize operational efficiency or have sustainable pricing power, or defensive companies that possess both.&#34; These types of companies often maintain stable performance during economic downturns.
<h2>The Rise of the &#34;Anti-Fall&#34; Essential Consumer Goods Industry</h2>
Bloomberg data shows that the U.S. essential consumer goods sector, including well-known brands such as Kraft Heinz, Procter &amp; Gamble, and Walmart, outperformed the blue-chip index in six out of the past eight weeks. Last week, the essential consumer goods index reached its highest level relative to the blue-chip index since March 2020, but has since retreated in recent days.
This achievement marks an expansion in the scope of this year's stock market rebound, which was previously driven mainly by large tech stocks. However, the market is now beginning to express concerns about the slowing profits of previously dominant tech stocks. Meanwhile, as cracks begin to appear in the U.S. labor market, it has sparked disagreements in the market regarding the extent to which the Federal Reserve should cut interest rates, as well as concerns about the possibility of the United States quickly falling into a recession.
Former Chief Strategist and Analyst at Leuthold Group, Jim Paulsen, stated:
<blockquote>
&#34;An economic recession clearly causes defensive stocks to outperform the broader market, while strong economic growth instead leads to underperformance for them.&#34;
Data collected by Deutsche Bank on fund flows shows that investors' positions are currently &#34;leaning towards&#34; defensive stocks in the bond category, including essential consumer goods, real estate, and utilities.
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It is worth noting that the essential consumer goods industry often lags behind the market in a bull market, but catches up during economic downturns. This industry performed well during the sell-off period in 2022, but struggled in the second half of 2023 when expectations of a &#34;soft landing&#34; dominated.
Kevin Gordon, Senior Investment Strategist at Charles Schwab, stated: &#34;In recent weeks, investors have realized that they were too aggressive on defensive stocks last year. Essential consumer goods declined in the first year of this bull market, consistent with the recent broadening rebound in the stock market.&#34;

Analyst Jim Paulsen pointed out that defensive stocks outperform the market during economic recessions, while the opposite is true for strong economic growth. This year, Coca Cola's stock price has risen by about 20%, while Colgate has risen by over 30%. With increasing concerns about a US economic recession, investors are turning to essential consumer goods, and retailers such as Walmart, Target, and Clorox are also performing well. Morgan Stanley has included Coca Cola and Colgate in its recommended list, recommending a focus on defensive companies with operational efficiency and pricing power

- Amid growing concerns about a US economic downturn, investors are seeking safe havens, with defensive stocks like Coca-Cola and Colgate-Palmolive gaining favor. These stocks have surged, with Coca-Cola up around 20% and Colgate-Palmolive over 30% year-to-date. Analysts suggest defensive stocks tend to perform well before Fed rate cuts, signaling potential economic recession. Investors are now favoring defensive sectors like consumer staples, anticipating a possible economic slowdown.
- Recognized brands in the US consumer staples sector, including Kraft Heinz, Procter & Gamble, and Walmart, have outperformed blue-chip indices in recent weeks. The sector's relative strength peaked last week but has since slightly retreated, reflecting concerns about tech stock profitability amid a broader market rebound. As labor market cracks appear in the US, diverging views on Fed rate cuts and recession fears persist.
- Data from Deutsche Bank indicates investors are favoring defensive stocks like consumer staples, real estate, and utilities. While consumer staples typically lag in bull markets, they catch up during economic downturns. Analysts foresee a strong performance during sell-offs in 2022 but potential underperformance during an anticipated "soft landing" in the latter half of 2023. Recent weeks have seen a shift as investors reevaluate their aggressive stance on defensive stocks during the ongoing market rebound.

How to fight against recession? Investors: Take a look at Coca Cola and Colgate?