Investors are preparing their portfolios for a potentially rocky patch in U.S. stocks, worried that a dramatic rebound in equities may stall amid dimming economic data and rising political uncertainty. Most money managers are wary of cutting equity exposure too drastically in a market that has rallied more than 40% since late March and stands near all-time highs despite widespread economic devastation and a global coronavirus pandemic. U.S. growth took its worst hit on record in the second quarter, while more recent data points to fading consumer confidence and jobless claims back on the rise.
The Dow and the S&P 500 closed lower on Thursday after economic data pointed at the steepest contraction of the US economy since the Great Depression in the second quarter.
The coronavirus disease 2019 (COVID-19) pandemic has adversely impacted most sectors and industries, pushed the U.S. unemployment rate up to Great Depression levels, and led to the highest volatility readings ever for equities, as measured by the CBOE Volatility Index. If this panic and volatility has done anything, it's made the case even stronger for investors own dividend stocks. For one, dividend stocks have historically run circles around non-dividend-paying companies.