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Staple Trumps Sexy as Coronavirus Ravages Stock Market

Last Updated September 23, 2020 1:38 PM
William Ebbs
Last Updated September 23, 2020 1:38 PM
  • The coronavirus crisis has sent the stock market into freefall and many of the most popular names are tanking.
  • Amid the carnage, boring stocks like the Dollar Tree, Clorox and Autozone are surprisingly resilient.
  • This trend reveals which companies will do well in an economic downturn – and investors should take note because a recession may be on its way.

Today has been one of the worst Monday opens in stock market history. At the start of early morning trading, the Dow crashed so hard it hit a circuit breaker and closed the market.

The carnage was also seen in the S&P 500 and the Nasdaq where many of tech’s biggest names saw their share prices crater over fears of the coronavirus pandemic.

The hottest companies in the market are seeing their share prices tumble. | Data by ycharts 

Retail-darling Tesla (NASDAQ: TSLA) is down by double-digits while Apple (NASDAQ: AAPL), Facebook (NASDAQ: FB) and Amazon (AMZN) are all down by high single-digits. But while popular stocks are getting wrecked, boring stocks like Dollar Tree, Clorox, and Autozone are leading the market with respectable gains.

Where do you want to be in a global recession? If today’s market action is anything to go by, the boring stocks look set to outperform.

Coronavirus Pandemic is Spooking the Market

The level of volatility and panic in the markets suggests a recession could be on its way. All this is sparked by the coronavirus epidemic that started in Wuhan, China before spreading around the world. It has now infected over 110,000 people and killed 3,995  with caseloads soaring in the United States.

Big tech companies like Apple, for example, are especially worried because the crisis is disrupting their supply chains and suppressing consumer activity. 

If the situation gets bad enough, there’s a real possibility we could be entering a massive global recession. This fear is pushing the market down with big tech leading the plunge.

Slow and Steady Wins the Race?

While coronavirus fears are creaming the high-flying tech stocks, boring names are surprisingly resilient amid the market downturn.

The Dollar Tree (NYSE: DLTR), Clorox (NYSE: CLX), and Autozone (NYSE: AZO) have all posted respectable gains today. Autozone is leading the charge with a massive 5% rally amid the wider market meltdown. Clorox gained 1% and Dollad Tree rallied 4.1%.

Less-sexy names are soaring amid the wider market downturn. Data by ycharts 

While it’s impossible to pinpoint exactly why these companies are so resilient in the face of market turmoil, it may be because of their consumer defensive nature.

Clorox sells disinfectant products that will be useful in a viral outbreak while Autozone and The Dollar Tree offer discount products that will be useful when consumer spending dips in a recession.

These stocks may be a good way to ride out the coming recession if their recent performance is anything to go by.