XLP: A Defensive Play In Today And Tomorrow's Market

Summary

• Fear that the Federal Reserve will hit the gas on rate hikes has caused investors to dump high growth technology stocks in recent weeks.
• In times of uncertainty, investors tend to lean on more established and predictable companies.
• The Consumer Staples Select Sector SPDR Fund provides exposure to a basket of companies that sell essential day-to-day products.
• Because we need their products regardless of economic conditions, consumer staples companies often perform well during pullbacks and recessions.
• I think XLP is a sound investment given today's market volatility. It's also a great defensive play against any future turbulence.

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My thought process

There is no doubt that stocks are off to a volatile start in 2022. With the Federal Reserve set to raise interest rates throughout the year to lull inflation, many investors are transitioning out

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in XLP over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.