Volatile times in markets require extra precision, says Goldman Sachs chief US equity strategist David Kostin.
In a new note on Friday, Kostin offered three recommendations for investors dealing with topsy-turvy markets ahead of the spring:
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Own US stocks "insensitive" to drivers of ongoing market volatility.
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Favor stocks with a high percentage of US sales and avoid companies with outsized overseas sales.
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Own second-derivative AI stocks; for example, those in the software services sector.
Several well-known stocks that exhibit these characteristics include Costco ( COST ), Kroger ( KR ), Eli Lilly ( LLY ), Visa ( V ), Charles Schwab ( SCHW ), and Alphabet ( GOOG ), Kostin said.
The markets have whipsawed this year , especially in March as investors digest a flurry of tariff headlines and slowing economic data. Warnings on demand this month from big companies Nike ( NKE ), FedEx ( FDX ), and Delta ( DAL ) have added to the investor angst.
"The current environment, however, is adding uncertainty to demand. We continue to work closely with our customers to help them adapt to this evolving market," FedEx CEO Raj Subramaniam said on a Thursday evening earnings call.
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A sell-off in the popular "Magnificent Seven" names — led by noted double-digit percentage drops in faves Tesla ( TSLA ) and Nvidia ( NVDA ) — has also dented sentiment.
Year to date, all three major stock indexes are in the red. The tech-heavy Nasdaq Composite ( ^IXIC ) has led the way lower with an 11% decline. The S&P 500 ( ^GSPC ) and Dow Jones Industrial Average ( ^DJI ) are down by 2% and 6.3%, respectively, this year.
The average decline for the three in March has been 5%.
Investors have sought out perceived safe havens.
Consumer staples — companies that sell soda to those offering healthcare services and energy — continue to attract their fair share of inflows as traders seek out businesses less tied to economic cyclicality.
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The iShares US Healthcare ETF ( IYH ) is only down 2% in March, but top holdings Merck ( MRK ) and Amgen ( AMGN ) are each up about 2.5% in the month. The ETF is up 5% year to date.
The Utilities Select Sector SPDR Fund ( XLU ) — comprised of key US utilities like Duke Energy ( DUK ) and Constellation Energy ( CEG ) — is up about 0.3% in March. It has advanced 4% on the year.
"In a moment where we've got uncertainty from policy and tariffs and things like that the markets are reacting. It was to be expected," Edward Jones CEO Penny Pennington told me on Yahoo Finance's Opening Bid podcast (video above). "So what we are saying to investors is, let's put in place a plan — a good plan is better than a bad prediction."
Pennington recommends leaning into portfolio diversification as markets enter mid-year.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi , Instagram , and LinkedIn