As markets face instability ahead of President Trump’s proposed “Liberation Day” on April 2, investors are turning toward defensive stocks like Johnson & Johnson, United Healthcare, and Procter & Gamble. These firms, known for providing essential goods and services, are playing a crucial role in limiting the S&P 500’s decline caused by tariff-related uncertainties. Concerns stem from the administration’s plan to implement reciprocal tariffs on foreign goods, a move that some anticipate could disrupt global trade dynamics and corporate earnings forecasts.
Earlier reports on Trump’s tariff strategy focused largely on its use as a negotiation tactic with specific nations like Canada and Mexico. More recently, India agreed to reduce tariffs on American imports by 55% and expand its purchasing of U.S. goods. Taiwan Semiconductor also committed $100 billion toward establishing chip manufacturing facilities in Arizona, aiming to avoid potential U.S. import duties and meet demand from companies like Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD). These developments reflect the larger strategic goal of creating a balanced trade environment, but also indicate how companies and countries are responding with preemptive measures.
How are defensive stocks mitigating losses in the S&P 500?
The broad market has seen a sell-off ahead of the announced tariff policy, with the S&P 500 shedding 60 points since mid-February. This downturn is fueled by investor fears that companies reliant on international supply chains may experience reduced revenue. However, defensive equities like Johnson & Johnson (JNJ), United Healthcare (UNH), and Procter & Gamble (PG) have not only remained stable but shown gains, providing a measure of support for the broader index.
Which company-specific developments are drawing investor interest?
Johnson & Johnson’s recent introduction of Dualto, a new electrosurgical power generator designed to reduce bleeding and improve healing times, has bolstered investor confidence. The company’s strong return on capital and valuation metrics further contribute to its appeal during uncertain times.
United Healthcare continues to benefit from its dominant position in the health insurance market. Public commentary has also played a part in investor sentiment.
“United Health is every bit as powerful as the government…and the government has historically not been able to take on this group,”
stated CNBC’s Jim Cramer, suggesting the firm’s resilience against regulatory shifts.
Procter & Gamble, a long-time staple in consumer goods, is attracting interest due to its perceived undervaluation and consistent dividend history. With over 50 consecutive years of dividend increases, PG is often viewed as a safe haven in volatile periods. Recent analyses suggest the company’s current stock price presents a 21% discount compared to broader market valuations.
The broader economic implications of tariff measures continue to weigh on market sentiment, especially for companies manufacturing overseas. However, the consistent performance of stalwart firms in healthcare, hygiene, and insurance suggests that investors are repositioning portfolios toward stability. While some observers see tariffs as a method to promote fair trade, others remain cautious about the costs to U.S. businesses and consumers.
Investors looking to navigate upcoming policy changes might consider focusing on sectors less affected by international trade dynamics. Defensive stocks like JNJ, UNH, and PG offer relative insulation due to the non-cyclical nature of their products and services. Additionally, their historical performance during periods of volatility indicates resilience. As the April 2 tariff rollout nears, market behavior will likely continue to reflect a preference for reliability and dividend consistency as buffers against policy-driven market shocks.
