The S&P 500 is down nearly 10 percent since the start of the year, with the average stock in the index now flat since the end of 2013. This has set off a frenzy of questions about the possible end of the bull market, and Wall Street is giving clients some insight into where they should invest if this is indeed the start of a bigger downturn.
While many Wall Street strategists still believe the broader bull market is intact, clients are rather torn. A Citigroup Inc. survey had 57 percent of clients labeling the latest fall in equities as a transitory blip, and the remaining 43 percent saying it was the start of a bear market. So to appease all of their clients, a number of firms are providing ideas for both scenarios.
Goldman Sachs Group Inc. gave investors some ideas last month, and now Barclays Plc is doing the same. While Goldman told clients to overweight stocks with strong balance sheets and high domestic sales, the team at Barclays, led by U.S. Equity Strategist Jonathan Glionna, focused on those with low volatility in the Consumer Staples, Health Care, and Telecommunications sectors.
"A recession playbook involves overweighting the consumer staples, health care, and telecommunications sectors and looking for companies with high profit margins and stocks with low volatility," the team writes. "The industries that do best include: 1) food, beverage, and tobacco; 2) household and personal products; and 3) health care equipment and services."
The firm went on to provide a list of 30 stocks that best fit its screening process. Popular names include Clorox Company, Hormel Foods Corporation, Johnson & Johnson, Kimberly-Clark Corporation, Medtronic Plc, Pfizer Inc. and Procter & Gamble Company.
Here's the full list:
On the flip side, if you're of the mind that the market will continue moving higher, Barclays suggests a far different strategy.
"A recovery playbook involves overweighting the energy, materials, industrials, and consumer discretionary sectors and looking for value stocks, companies with high leverage, and stocks with high dividend yields."