Trump Tariffs and the Nasdaq Correction Have Been No Match for These Stock Market Sectors

Trump Tariffs and the Nasdaq Correction Have Been No Match for These Stock Market Sectors

  • 17.03.2025 16:00
  • theglobeandmail.com
  • Keywords: success, success

Despite Trump tariffs and Nasdaq corrections, healthcare, utilities, and consumer staples have outperformed in 2025. Investors can access these sectors through ETFs like VHT, VPU, and VDC, offering stability during market uncertainty.

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Estimated market influence

S&P 500

Negativesentiment_dissatisfied
Analyst rating: N/A

The S&P 500 is cooling off after gains in 2023 and 2024.

Nasdaq Composite

Negativesentiment_dissatisfied
Analyst rating: N/A

In a correction, down over 10% from recent high.

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Alphabet

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Analyst rating: Buy

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Context

Analysis of Market Trends and Business Insights

Key Market Performance

  • S&P 500: Down 5.9% YTD.
  • Nasdaq Composite: In correction territory (down over 10% from recent high).
  • Healthcare Sector: Outperformed with a YTD gain of 4.5% (via Vanguard Health Care ETF, VHT).
  • Utilities Sector: Demonstrated resilience with a YTD gain (via Vanguard Utilities ETF, VPU).
  • Consumer Staples Sector: Showed steady performance despite broader market volatility (via Vanguard Consumer Staples ETF, VDC).

Sector-Specific Insights

1. Healthcare

  • Vanguard Health Care ETF (VHT): Gained 4.5% YTD with a 0.09% expense ratio.
  • Key Companies: Eli Lilly and UnitedHealth Group faced challenges but contributed to sector resilience.
  • Demand Dynamics: Healthcare demand is less vulnerable to economic cycles, though sectors like pharmaceuticals may face risks due to product categorization (e.g., discretionary vs. essential).

2. Utilities

  • Vanguard Utilities ETF (VPU): Yields 2.9% with a P/E ratio of 20.2.
  • Regulation Impact: Predictable cash flows and reduced upside potential make utilities a safe but low-growth sector.
  • Tariff Resistance: Minimal impact from tariffs due to domestic focus.

3. Consumer Staples

  • Vanguard Consumer Staples ETF (VDC): Includes major companies like Costco, Walmart, Procter & Gamble, Coca-Cola, and PepsiCo.
  • Recession Resilience: Essential products maintain steady demand during economic downturns.
  • Pricing Power: Companies can pass on costs due to strong consumer demand.

Strategic Considerations

  • Diversification Benefits: Safe sectors provide portfolio diversification by reducing correlation with broader market indices.
  • Portfolio Balance: Investors should consider adding safer ETFs to offset volatility in growth stocks (e.g., Nvidia, Apple, Amazon).
  • Long-Term Implications: Sectors like healthcare and consumer staples may face risks from sustained tariff impacts or regulatory changes.

Competitive Dynamics

  • Healthcare: Eli Lilly's dominance (10.5% weighting in VHT) highlights sector concentration risks.
  • Consumer Staples: Costco and Walmart account for over 25% of VDC, influencing ETF performance.

Conclusion

The outperformance of healthcare, utilities, and consumer staples underscores the importance of sector diversification during market uncertainty. These sectors offer stability and income generation, making them attractive for long-term investment strategies.