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Key Takeaways
- Consumer staples stocks have struggled lately as consumers reassess their spending amid stubborn inflation.
- However, staple stocks rose Wednesday as investors moved out of technology stocks.
- Investors could be looking to hedge against economic weakness and capitalize on the sector’s recent underperformance.
While tech stocks are falling Wednesday, consumer staples are on the rise.
The S&P 500’s consumer staples sector was up 1.5%, making it the benchmark index’s best performer on a day when the broader index and the tech-focused Nasdaq Composite were in retreat.
The moves lifted shares of companies including food makers General Mills ( GIS ), Conagra Brands ( CAG ), J.M. Smucker ( SJM ) and Kellanova ( K ). Nearly all of the sector’s components were recently in the green, with a few retailers among the exceptions. General Mills was up about 4%, making it one of the S&P 500’s top gainers.
Why Are Consumer Staple Stocks Up?
Concerns about the health of the U.S. consumer have weighed on staples companies lately.
PepsiCo ( PEP ) recently offered a warning that shoppers were getting more “ value-conscious ,” while Pringles maker Kellanova cited “ challenging ” economic conditions. The recent comments indicate some of their product lines may be under pressure from white-label alternatives. But the stocks are also seen as possible hedges against economic weakness.
Investors may also be attracted to the sector as they look for stocks that have lately underperformed.
The sector rose 8% in the first half, according to S&P Dow Jones Indices data, lagging technology and communications services stocks. Respondents to Bank of America’s latest monthly fund manager survey said they have lately increased their allocation to staples shares while pulling back on discretionary stocks.