Consumer Staples Gain on Rush to Safety After Tariffs Spark Market Rout

Wall Street Journal

03-04-2025

Investors turned to the familiar safe havens of food, beverages and household staples to escape the market turmoil brought on by President Trump's latest round of tariffs.
Food and drink companies including Kraft Heinz, General Mills, Coca-Cola, PepsiCo and Mondelez International gained between 1.5% and 3% in trading Thursday. The makers of household staples such as Colgate, Church & Dwight CHD 2.25%increase; green up pointing triangle, Kimberly-Clark and Procter & Gamble all rose 1.6% to 2.6%.
Consumer staples was the only one of 11 industry sectors in the S&P 500 to finish higher on Thursday, rising 0.7%. The index overall fell 4.8% on the day, as more than four out of five stocks declined. It was the worst single-day decline for the U.S. market since March 2020.
Citi analyst Filippo Falorni said consumer staples are more recession proof than most other sectors, providing stable earnings and revenue even in a tough environment.
The sector's exposure to the tariffs that are poised to hit a number of industries, from clothing and shoe makers, to toys and autoparts companies, is minimal.
'These companies are up because investors are looking for stocks with a low exposure to tariffs, and also because they could be more protective if there's a general slowdown in the consumer,' he said.
Some do manufacture products in other countries. Falorni cited Colgate toothpaste and Procter & Gamble razors made in Mexico as examples. 'So the tariff exposure is there, but it's much lower than for others,' Falorni said.
The current bright spot in consumer staples comes after many of these companies underperformed the broader market in the past two years, as investors bid up big tech stocks such as Apple and Nvidia, driving much of the growth in the broader index.
Another source of solace for investors on Thursday was shares of a major retailer of consumer staples, Kroger. The grocery store operator's stock closed up 5.2%, making it the sixth-best performer in the S&P 500.
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