5 Defensive Stocks to Ride Out Market Volatility

The market has been strong so far this year, but several upcoming events could put it to the test. The August inflation report is due on September 11 and will be followed by the Federal Reserve's interest rate decision just five days later. This combination of catalysts could move markets sharply, especially considering that history shows midterm election years often produce sharp declines in the autumn before recovering once the vote passes.

While this doesn't mean stocks will necessarily fall, it's a reminder to be prepared for any potential market volatility. Several defensive stocks have historically weathered economic downturns and volatile market conditions well. Five such names are McDonald's (MCD), Johnson & Johnson (JNJ), Walmart (WMT), Berkshire Hathaway (BRK.B), and NextEra Energy (NEE).

McDonald's, for example, has a unique ability to benefit from the 'trade-down effect' during economic soft patches. When consumers tighten their budgets, they don't stop eating out entirely; instead, they opt for cheaper alternatives like fast food, which can actually increase McDonald's traffic.