Goldman Sachs Predicts 6% S&P 500 Decline, Lists 45 Resilient Stocks

As the anticipated "liberation day" for former U.S. President Donald Trump approaches, investors are expressing concerns about the potential impact of new tariffs on global trade. This uncertainty has led to a heightened focus on market stability and the identification of stocks that can withstand potential market volatility. In response to these concerns, Goldman Sachs has compiled a list of 45 stocks that are expected to be resilient in the face of market fluctuations. The list, referred to as the "wealth code," aims to provide investors with a strategic guide to navigate the potential market turbulence that may arise from new tariffs and trade policies.

Goldman Sachs' stock strategy team anticipates that the market will experience significant volatility, predicting a 6% decline in the S&P 500 Index to around 5,300 points over the next three months, followed by a rebound to 5,900 points within 12 months. This forecast indicates that while the market may see a 5% increase from current levels, it will still fall short of the record high of nearly 6,150 points reached in February. The research team at Goldman Sachs advises investors to focus on stocks that have a low correlation with recent market volatility drivers, essentially companies that can maintain stability during market turbulence.

Leading the list is Amdocs, a billing software company whose business is relatively insensitive to U.S. economic growth prospects, trade risks, and market disruptions caused by artificial intelligence. Other companies on the list include New York Mellon Bank, Kroger, Valvoline, S&P Global, and Moody's. These companies are less affected by daily market news, making them potential safe havens during turbulent times. Notably, Alphabet, the parent company of Google and one of the "Magnificent Seven," is also included in the list. Overall, these 45 stocks have a median total return of 1% for the year, compared to a 5% decline in the S&P 500 Index.

The healthcare sector is another highlight of the list, featuring major medical device companies such as Boston Scientific, Medtronic, Thermo Fisher Scientific, and Masimo. Despite concerns about the potential impact of policies from the Department of Health and Human Services on the vaccine and pharmaceutical industries, healthcare stocks are considered stable defensive assets. These companies typically maintain steady earnings growth regardless of macroeconomic changes. "Healthcare stocks have strong defensive attributes," said Jim Polk, stock investment manager at Homestead Funds. "They often become targets of political attacks but still show resilient growth." Polk personally holds Boston Scientific stock, believing the company will not face the same policy pressures as pharmaceutical companies.

In addition to healthcare stocks, the list includes several utility companies, such as Pacific Gas & Electric and CenterPoint Energy. These companies are favored by conservative investors seeking stable returns, as they typically distribute dividends to shareholders. Pacific Gas & Electric resumed dividend payments at the end of 2023 after a six-year suspension, while CenterPoint Energy currently offers a dividend yield of nearly 2.5%. Joe Rinaldi, president and chief investment officer at Quantum Financial Advisors, considers the utility sector one of his favorite investment areas due to its stability during market volatility and reliable dividend returns. "I like the utility sector," Rinaldi said. "In low-risk scenarios, you can still achieve stable dividend income." He also noted that many utility stocks tend to decline less than the broader market during periods of instability.