Growing numbers on Wall Street are speaking of recession risk, with Goldman Sachs, Deutsche Bank and more all pointing to a higher likelihood of a recession. “Economic data points suggest a higher likelihood of a recession,” Morgan Stanley analysts said in a June 29 note. “Since the start of the year, we’ve seen record inflation … 170 bps [basis points] 10-year Treasury yields rose, the Fed raised rates by a historic 75bp to combat rising inflation, and consumer and business sentiment turned more negative. “In the year since 1970, down nearly 20%. And Goldman says there’s a lot of uncertainty ahead.” Until the growth/inflation combination improves, the market is likely to remain volatile. move as investors transition between inflation frustration and recession phobia,” the bank wrote on June 29. “We look for opportunities to add risk to 12m; while the possibility of a recession has increased We wouldn’t expect it to be deep or long.” Here are some of Wall Street’s favorite stocks should a recession materialize. Buy low-risk, discount names in the utility industry. According to Morgan Stanley, has beaten the S&P 500 by about 15% annually and could continue to outperform “modestly” in the event of a weak economy or outright recession, according to Morgan Stanley. low-risk names to outperform the market. They selected American Electric Power, Exelon and Atmos Energy as value names with good upside potential, “low-risk characteristics” and bearish trades. Read more Is the bear market coming to an end? Here’s an Index Experts Say to Keep a Close Watch Morgan Stanley Favorites These 9 Global Stocks Trade at ‘Significantly’ Lows This fund manager is beating the market – and he has 4 advice to investors “We think utilities are low risk around regulation, climate, dd Morgan Stanley analysts wrote in the “book on clean technology and utilities recession. ” Demand for clean energy could soar. such as Sunrun, Plug Power, AES and Solaredge Technologies, could continue to see strong underlying business performance through the downturn. Cleanliness remains strong, even as we head into a recession, with cost deflation (i.e. saving customers money as wallets tighten) and outstanding reliability due to innovative technologies. But Morgan Stanley warns that the broader clean tech sector may not beat the overall market during a downturn, if history is any guide. outperforming the S&P 500 12% to date Looking at small- and mid-cap companies, Bank of America says that despite the volatility dynamics in the market, the “roadmap to alpha” in small-cap companies remains consistent. Alpha is a measure of an investment’s performance against a benchmark. In a June 30 note, the bank named a number of small- and mid-cap stocks on the Russell 2000 and Russell Midcap indexes that it said have historically performed best during recessions. . It looks at high-quality stocks – those that are more profitable with a stable business track record over time – and the risk factors, as well as the company’s ability to pay dividends. for shareholders. Buy-rated stocks appearing on Bank of America’s display include auto parts retailer O’Reilly Automotive, foods company Hershey, healthcare company Chemed Corporation and appliance maker electronics and Amphenol fiber optic connections. Industrial technology company Vontier, analytics company EXL Service and packaging company Avery Dennison also made the list. Significant downside risk Evercore ISI said growing fears of a recession have prompted it to assess which tech and IT stocks it covers could be best placed during a downturn. In a note on June 27, the consulting firm said it thinks there is still “significant downside risk (average ~ 30-40% from current levels) assuming a recession scenario”. .” However, they said stocks including Check Point Software Technologies, Dell, IBM and Palo Alto Networks have lower downside risk potential (less than 20% drop). “We think high revenue visibility, customer/end market diversity, strong balance sheets, less cyclical risk, and/or other risks,” the analysts wrote. Secular growth drivers will help insulate these companies from macro difficulties,” the analysts wrote. They also note that, when looking at past performance during the downturn, Dell and IBM in particular, have been successful in protecting their bottom line.