The Federal Reserve decided to keep interest rates unchanged at its June policy meeting on Wednesday. While the move was widely expected, officials indicated the possibility of a rate cut later this year as they continue to struggle with rising inflation over the past three months.
High interest rates may continue to put pressure on economic growth and prolong market volatility.
Against this backdrop, investors may consider defensive stocks from the consumer staples sector, such as American States Water Company AWR, Consolidated Edison, Inc ED, The Coca-Cola Company KO and The New York Times Company NYT.
These stocks have seen positive earnings estimate revisions in the past 60 days, carry a Zacks Rank #2 (Buy) at present, and are set for solid returns. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fed Hints at Possible Policy Shift
The Federal Reserve kept its benchmark interest rate unchanged in the 3.5–3.75% range at the end of the Federal Open Market Committee meeting last week. The central bank’s decision was widely anticipated by markets as it continues to tame sky-high inflation. This meeting also marked Kevin Warsh’s first as Federal Reserve Chair.
The Fed’s communication saw a notable change, as officials removed earlier wording that had hinted at the likelihood of additional rate cuts. At the same time, policymakers suggested that future rate increases could still be on the table if needed.
So far this year, the central bank has kept rates steady after cutting them by 75 basis points at the end of 2025. Inflation remains a key concern. Although price growth eased significantly in 2025, the Iran conflict that began in late February pushed oil prices to record levels, contributing to renewed inflationary pressure.
The Consumer Price Index rose 0.5% in May, following a 0.6% increase in April. With the Fed’s 2% inflation target proving difficult to achieve, additional tightening could further strain consumers, many of whom are already reducing spending.
A rate hike at the end of the year hints at additional pressure on consumers and the various sectors, as it could slow demand for both goods and services.
4 Low-Beta Defensive Stocks With Growth Potential
American States Water Company
American States Water Company, along with its subsidiaries, provides fresh water, wastewater services and electricity to its customers in the United States. AWR principally works through its two major subsidiaries — Golden State Water Company and American States Utility Services.
American States Water Company has an expected earnings growth rate of 10.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.3% over the last 60 days. Currently, AWR has a Zacks Rank #2. American States Water Company has a beta of 0.60 and a current dividend yield of 2.61%.
Consolidated Edison
Consolidated Edison, Inc. is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. ED’s regulated businesses operate through its subsidiaries — Consolidated Edison Company of New York, Orange and Rockland Utilities, Con Edison Clean Energy Businesses, Inc. and Con Edison Transmission, Inc.
Consolidated Edison has an expected earnings growth rate of 6.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. Consolidated Edison has a beta of 0.27 and a current dividend yield of 3.34%.
The Coca-Cola Company
The Coca-Cola Company’s strong brand equity, marketing, research and innovation help it to garner a market share of more than 40% in the non-alcoholic beverage industry. KO is putting its best foot forward to evolve its business model to become a total beverage company with something for everyone to drink. The Coca-Cola Company has coped with the industry-wide flattening of soda sales over the years by going on a buying spree and making investments in healthier alternatives like coffee, sparkling water and sports drinks.
The Coca-Cola Company has an expected earnings growth rate of 8.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 60 days. KO has a beta of 0.35 and a current dividend yield of 2.67%.
The New York Times Company
The New York Times Company is a leading global media organization focused on delivering high-quality journalism and information. Founded in 1851 and incorporated in 1896, NYT has evolved from a traditional newspaper publisher into a diversified digital-first media company with a strong global subscriber base and a growing portfolio of lifestyle and entertainment products.
The New York Times Companyhas an expected earnings growth rate of 19.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5% over the last 60 days. NYT has a beta of 0.95 and a current dividend yield of 1.26%.
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CocaCola Company (The) (KO): Free Stock Analysis Report
The New York Times Company (NYT): Free Stock Analysis Report
Consolidated Edison Inc (ED): Free Stock Analysis Report
American States Water Company (AWR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).