Rethinking Defensive Stocks: Are Coca-Cola and Hershey's the New Safe Havens in a Volatile Market?

The global investment landscape in 2026 is marked by a recalibration of risk preferences, driven by macroeconomic uncertainties and shifting institutional priorities. As markets grapple with the aftermath of prolonged monetary tightening and geopolitical fragmentation, a subtle but significant pivot toward defensive equities is emerging. This trend is underscored by the actions of U.S. lawmakers, institutional fund flows, and analyst forecasts, all pointing to a renewed interest in consumer staples. Among the most notable examples are The Coca-Cola Co (KO:US) and Hershey's (HSY:US), whose recent trading activity and fundamental resilience have positioned them as potential safe havens in an increasingly volatile environment.

Congressional Trades and the Shift to Defensive Equities

Senator Sheldon Whitehouse's recent transactions offer a microcosm of this broader trend. In late 2025, the Rhode Island Democrat disclosed purchases in Coca-Cola and Hershey's, both classified as defensive stocks due to their stable demand and consistent cash flows. These moves followed his divestment from high-growth tech names like NVIDIA and Apple, reflecting a strategic reallocation toward income-generating, recession-resistant assets. Such behavior aligns with broader congressional trading patterns, where lawmakers have increasingly favored sectors less susceptible to economic cycles.

This shift is not merely anecdotal. The Restoring Faith in Government Act, a bipartisan proposal to restrict congressional stock trading, has heightened scrutiny over lawmakers' investment choices. Yet, the very fact that politicians are favoring defensive stocks suggests a pragmatic acknowledgment of macroeconomic risks. As one analyst noted, "The market is sending a signal: in times of uncertainty, investors prioritize stability over speculative growth".

Institutional Positioning: From Magnificent 7 to Consumer Staples

The institutional investor landscape has mirrored this reallocation. For much of 2025, the Magnificent 7 dominated market performance, accounting for nearly half of the S&P 500's year-to-date gains. However, concerns over stretched valuations and regulatory scrutiny have prompted a rotation into more diversified holdings. By Q3 2025, institutional investors began reducing exposure to these tech giants, redirecting capital toward sectors like consumer staples.

This pivot is evident in fund flows. The consumer staples sector, which lagged behind the broader market in 2025, has seen renewed interest from investors seeking downside protection. While the sector recorded a -2.9% return in Q3, its underperformance was partly due to macroeconomic headwinds, such as rising living costs and cautious consumer spending. Analysts argue that this weakness has created opportunities for undervalued names with strong brand equity and operational resilience.

Coca-Cola and Hershey's: Defensive Qualities in Focus

Coca-Cola and Hershey's exemplify the appeal of defensive equities. Coca-Cola, with its 63-year streak of dividend growth and a 2.9% yield, remains a cornerstone for income-focused investors. Analysts project a median price target of $80.00 for the stock in 2026, implying a 9.7% upside from its current level. The company's asset-light business model and global distribution network further insulate it from cyclical downturns, making it a compelling long-term holding.

Hershey's, meanwhile, faces unique challenges, including elevated cocoa costs and shifting consumer preferences. Yet, its strong brand loyalty and consistent demand across economic cycles have kept it in institutional portfolios. Analysts assign a median price target of $187.50, with the stock currently trading near its average target of $189.00. While upside is limited compared to Coca-Cola, Hershey's defensive attributes-such as its pricing power and diversified product portfolio-make it a resilient play in a fragmented market.

2026 Outlook: A Case for Re-evaluation

Institutional forecasts for 2026 suggest that defensive sectors may gain traction as volatility persists. While the consumer staples sector is not expected to outperform high-growth tech, its role as a stabilizer in diversified portfolios is increasingly recognized. Morgan Stanley's 2026 outlook highlights that U.S. stocks will likely outperform global peers, but defensive allocations will be critical in mitigating downside risks.

Moreover, structural shifts in retail and supply chains-driven by AI adoption and trade realignments-favor companies with robust fundamentals. Coca-Cola and Hershey's, with their established market positions and adaptability, are well-positioned to navigate these changes. As one strategist observed, "In a world of uncertainty, the ability to generate consistent cash flows" and reinvest in innovation is invaluable.

Conclusion

The strategic pivot toward defensive stocks in 2026 reflects a pragmatic response to a complex macroeconomic environment. Senator Whitehouse's trades, institutional fund flows, and analyst forecasts collectively underscore a growing preference for stability over speculation. While the Magnificent 7 will likely remain market leaders, their dominance is being tempered by a broader recognition of the value in defensive, dividend-driven equities. For investors, this presents an opportunity to rebalance portfolios toward companies like Coca-Cola and Hershey's-names that offer resilience, income, and long-term growth potential in an era of uncertainty.