With the S & P 500 finally breaking below a key support level at 5,850, and the former high-flying “Magnificent 7” stocks trading more like the “Meager 7” in 2025, where can investors look to ride out this period of market uncertainty? We’ll highlight three stocks with three factors in common: they are in defensive sectors that tend to do well during bear market phases, they have a dividend yield higher than the S & P 500, and they are featuring compelling technical profiles. First, let’s look to the health care sector, which has actually been the top performing S & P 500 in 2025. While other stocks in the health care sector have experienced stronger gains so far in 2025, we’re focused on Bristol Myers Squibb Co. (BMY) because it’s currently working through a consolidation pattern. This sideways pattern started last October, soon after BMY broke above the $54 resistance level from earlier in 2024. With clear resistance around $61, a break above this price point would mean an upside resolution to this sideways trend, and BMY would then be sitting above two upward-sloping moving averages. With a dividend yield just over 4%, and a price trend close to a breakout point, we could see the powerful combination of strong price performance with a healthy dividend component for this emerging health care name. The second best performing sector in 2025 has been consumer staples, and the tobacco group has shown strong performance going back to mid-2024. While other tobacco names have experienced stronger price action, we see British American Tobacco (BTI) as a compelling option because of its recent downside gap to price support. BTI gapped higher in mid-January to achieve a new 52-week high, and traded just above $42 last month before a gap lower after their quarterly earnings call. The earnings miss pushed BTI down about 13% to its 50-day moving average, which once again held as key price support. This successful test of the 50-day came with an RSI value around 40, confirming that BTI remains in a bullish phase. Given the recent pullback, along with a dividend yield just above 7%, we see this as a compelling chart within a strong sector. Utilities became a growth trade in 2024, driven by the incredible power needs of artificial intelligence and other emerging technologies. Shares of American Electric Power Co. (AEP) have recently pushed to a new 52-week high while the S & P 500 and Nasdaq have dropped below key support levels, translating to a strong relative performance line at the bottom of the chart. The break above resistance at $102 last month suggested a new uptrend phase after a seven-month consolidation period. AEP now sits above two upward-sloping moving averages, along with strong price momentum, improving relative strength, and a dividend yield around 3.4%. When the broad market indexes show clear signs of fatigue, and the previous leadership names begin to struggle, savvy investors look for stocks demonstrating strong relative strength and a decent dividend yield. These three names in defensive sectors could provide opportunities to outperform amidst a period of market uncertainty. —David Keller, CMT marketmisbehavior.com DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
