Investor fears are mounting — inflation is at a 40-year-high, the U.S. is teetering on recession, and the S&P 500 officially entered a bear market as it has fallen more than 20% from its previous all-time high.
More than that – after May’s CPI numbers were released, based on the prices of short-term credit futures, CME's FedWatch technology predicts a 30% chance of a 75-basis-point rate hike at this month's FOMC. A raise of 75 basis points would be the largest since 1994.
Investors are left to ask themselves, should I sell my stocks?
An investor could sell their stocks and hold out until signs of the next bull market arise, or they can seek to understand what happens with stocks during a bear market or a recession and prepare themselves for what may be ahead.
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A recession is well-known as a normal aspect of the economic cycle. Simply put, the cycle occurs when the economy transitions from a boom phase to a recession and then back to growth. Because it directly affects stock prices in relation to business profitability, this is undoubtedly the most powerful impact on the broader markets.
The relationship between the stock market and the economic cycle is reflected in several market sectors, each of which is sensitive to different periods of the cycle.
When the economy is booming, some sectors will outperform because investors and the general public have more money to invest, which fuels the growth. Although, industrials, consumer names, and real estate are the sectors that investors should avoid during a recession. Some of those stocks include:
| Name | Symbol | Change YTD | Sector |
| American Airlines Group Inc | AAL | -31.24% | Consumer Discretion |
| Lucid Group Inc | LCID | -59.26% | Automotive |
| Freeport-McMoRan Inc | FCX | -11.04% | Industrials |
| Chevron Corporation | CVX | +42.05% | Energy |
| Halliburton Company | HAL | +55.15% | Energy |
| Boeing Co | BA | -43.03% | Consumer Discretion |
| Baker Hughes Co | BKR | +33.69% | Energy |
| Schlumberger NV | SLB | +38.30% | Energy |
| American Electric Power Company Inc | AEP | +1.40% | Utlities |
| Carnival Corp | CCL | -54.74% | Consumer Discretion |
