- The Dow closes 2019 with good prospects to set new records in 2020.
- Yet there are still threats looming ahead that could “melt up” equities.
- Here are three defensive Dow stocks that offer exposure to continued bullish Dow growth, while also fortifying your portfolio against downside risks.
After broaching record highs this week, the Dow Jones Industrial Average continues to defy the bearish portents. Going into 2020, the Dow has good prospects for more growth.
No more interest rate cuts will be needed as the economy strengthens, and signs of progress in US-China trade talks could continue the expansion. But investors are eyeing threats on the horizon. The trade talks aren’t concluded yet, and bad news from Boeing (NYSE: BA) is creating some drag.
Why the Dow Could Teeter in 2020
Analysts at Bank of America Merrill Lynch fear the longest-running bull market in history is due for a pullback. They’ve described the market as “primed for Q1 2020 risk asset melt-up.”
That would bring rapid gains, but it would also leave equities prices vulnerable. If the asset bubble bursts, defensive stocks could mitigate losses.
Here are three defensive Dow stocks that provide exposure to a continued bull market expansion, while hedging against losses in a bear market.
1. Walmart (NYSE: WMT)
Walmart is the world’s largest retailer and number one corporate employer. Though it reached scale in the brick and mortar era, Walmart is keeping up with competitors in online retail. Its e-commerce business surged 41% in the third quarter.
The Dow 30 company is no worse for the wear in its fierce competition with Amazon (NASDAQ: AMZN). Its market dominance and economies of scale in the consumer staples space make it a Wall Street favorite for defensive stocks.