When Stocks Slide, These Are the Sectors That Do Best

Is the worst over for the stock market? Maybe. However, significant uncertainty remains -- even with the U.S. Court of International Trade ordering a halt to many of President Donald Trump's tariffs. (The administration has appealed.)

The stock market may sink again. Billionaire hedge fund manager Steve Cohen even stated recently that stocks could decline nearly as much as they did in April. Investors can be prepared if he's right. When stocks slide, these are the sectors that do best.

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Utilities: a favorite safe haven

Investors have long viewed the utilities sector as a safe haven during turbulent markets. And for good reason. Utility stocks can typically count on steady revenue and cash flow regardless of what's happening in the stock market or the economy. Many of them enjoy monopolies in their areas of service.

Image source: Getty Images.

Just look back at 2022. The S&P 500 (SNPINDEX: ^GSPC) plunged roughly 19.4%, marking its worst performance since the major meltdown in 2008. Utilities stocks, though, delivered a total return of 1.57% including dividends. That normally wouldn't be anything to get excited about, but it's a lot better than a huge loss for the year.

The utilities sector is also holding up quite well during the current market volatility. The Utilities Select Sector SPDR Fund (NYSEMKT: XLU), which owns 31 utility stocks, has trounced the S&P 500 while remaining in positive territory most of the year so far.

I think this exchange-traded fund (ETF) is a great way to invest in the utilities sector. However, there are also plenty of attractive individual utility stocks you can buy. Dominion Energy (NYSE: D) is among my favorite utility safe havens. The company has solid growth prospects, with its home state of Virginia a hotspot for data centers. Dominion also pays a juicy dividend that yields 4.76%.

Consumer staples: must-haves for consumers (and investors)

The consumer staples sector includes companies that sell essential goods and services that consumers buy during good and bad economic periods. Think food, beverages, household supplies, and personal care products. While consumer staples are must-haves for consumers, consumer staples stocks can be must-haves for investors when the market declines significantly.

When the dot-com bubble burst in 2000 through 2002, consumer staples stocks skyrocketed while the S&P 500 plunged. It was a similar story during the financial crisis of 2007 through 2009. The consumer staples sector also outperformed all other sectors during the initial stock market sell-off caused by COVID-19 lockdowns.

How have consumer staples stocks performed with the tariff-fueled market volatility in 2025? Pretty well. The Consumer Staples Select Sector SPDR Fund (NYSEMKT: XLP), which owns 38 consumer staples stocks, is handily beating the S&P 500.

Investors seeking to gain exposure to the consumer staples sector might want to consider buying this ETF. Alternatively, you could buy individual consumer staples stocks. The Coca-Cola Company (NYSE: KO) looks like a solid pick, in my view. Coca-Cola is a longtime winner and a Dividend King. It's also one of Warren Buffett's favorite stocks.

Healthcare: usually resilient during crises

Like consumer staples, healthcare products and services, at least in many cases, are must-haves for people regardless of what's going on with the economy or the stock market. As a result, the healthcare sector tends to be resilient during crises.

Healthcare stocks on aggregate delivered positive returns during the dot-com bubble, the global financial crisis that led to the Great Recession, and the early innings of the COVID-19 pandemic. However, the healthcare sector has underperformed the S&P 500 in 2025, with the Health Care Select Sector SPDR Fund (NYSEMKT: XLV) down around 4%.

What's behind this decline? The Trump administration's tariffs could hurt some medical technology companies. Drugmakers are worried about the prospects of tariffs on pharmaceutical imports and most-favored-nation drug pricing.

Many healthcare stocks have still beaten the market, though. I think Vertex Pharmaceuticals (NASDAQ: VRTX) is one of the strongest of the group. This big biotech company sells the only therapies that treat the underlying cause of cystic fibrosis. Vertex also has a recently approved non-opioid pain drug that should be a huge commercial success.

Energy: sometimes strong, but sometimes not

The energy sector is another sector that sometimes performs well during market declines, but not always. For example, energy was the only sector delivering a positive return during 2022 (excluding dividends). It didn't just eke out a small gain either: Energy stocks soared 59%.

However, energy is one of the worst-performing S&P 500 sectors so far this year. Why? Declining oil prices and worries about the impact of tariffs on the global economy are two main culprits.

You can still find winners in the energy sector, though. Enbridge (NYSE: ENB) is one of my favorites. Shares of the midstream energy leader are up around 8% year to date. It also offers a juicy forward dividend yield of 5.91%.

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Keith Speights has positions in Dominion Energy, Enbridge, and Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Enbridge and Vertex Pharmaceuticals. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.