Even President Donald Trump won't rule out if a recession is on the way. And if it is, you'll want to know which S&P 500 stocks to avoid.
The stocks that routinely suffer most during recessions are somewhat counterintuitive — as they seem like makers of necessities. Four stocks in the S&P 500, including industrial company Boeing and energy firms Baker Hughes and Halliburton, underperformed the S&P 500 in each of the past five recessions, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. All lagged the S&P 500 in each of the five recessions since 1980 — including the most recent Covid recession in 2020.
The idea that some industrials and energy may underperform in a recession is a good reminder. These are two of the sectors many S&P 500 investors are clinging onto now as the odds of recession grow. "We remain concerned about economic growth in (the first half of 2025). The consumer is the biggest threat as debt and higher prices are straining balance sheets. We expect this valuation correction in equities to continue as investors were complacent coming into 2025 about the economic and inflation risk," said Megan Horneman, chief investment officer at Verdence Capital Advisors.
Why Recession Is On The Table For S&P 500 Investors
Investors typically expect a recession every decade. And it's only been four years since the Covid-19 outbreak sparked one in 2020. Why the recession worries now?
Stubborn inflation, especially for housing and food, plus onerous tariffs could crimp consumer spending. Consumer optimism, a forward indicator, is also skidding. Layoffs are on the rise.
Investors usually do one thing in recessions: They sell S&P 500 stocks. But not as much as you might think. There have been 11 recessions in the U.S. since the one that started in 1953. And the S&P 500 dropped an average 2.1% during them. Sure, it can be worse. The S&P 500 plunged 11.2% in the last recession that started in 2020. And it fell nearly 38% in the 2007-starting recession.
But some S&P 500 stocks are especially vulnerable during recessions.
The S&P 500 Stock You Really Don't Want To Own In A Recession: Boeing
If there's an S&P 500 stock that might surprise investors with its demonstrated poor track record in recent recessions, it's aircraft maker Boeing.
Shares of the company that's part of a near oligopoly for commercial airplanes is a dud in recessions. Shares have dropped an average 33.4% in the past five recessions. That's the second worst showing of any S&P 500 stock in that time. It's surprising, too, as Boeing typically carries a big backlog of plane orders.
But apparently some of that demand evaporates in recessions, along with demand for the stock. Shares of Boeing plunged 59% in the recession that started in 2020, 54% in the one that began in 2007 and 41% in the 2001 recession. And that's a real danger for investors piling who have already pushed it down 13% this year.
Avoid S&P 500 Energy And Industrials In A Recession?
Investors are hiding in energy stocks this year to protect themselves from tariffs. They're also not selling industrials as much as you might think on the idea they might benefit from protectionism. But there's just one problem: Many of these stocks suffer mightily in recessions.
Take Halliburton. It's a sinking stock this year, down roughly 9% as it's supplying equipment needed to unearth fossil fuels. But it's been a horrible stock to own in previous recessions. Halliburton shares dropped an average of more than 40% in the past five recessions. And it can be worse, still. Shares of Halliburton lost more than half their value in the 2020 Covid recession.
And it's a similar story with Baker Hughes, also a supplier of equipment to energy firms. Its shares dropped more than 30%, on average, in the last five recessions.
This could be the big revelation to investors who are jumping into energy stocks. It's widely thought they're good bets during inflation. The Energy Select Sector SPDR Fund is up 2% during the year so far. That's solid performance when the S&P 500 is off roughly 5% on the year.
But if there's a recession, all bets are off. Energy stocks lost more than 20% of their value in the past three recessions.
And who knows what Trump's next target will be?
Worst S&P 500 Stocks During Recessions
They lagged the market in each of the past five recessions
| Company | Symbol | Stock year-to-date % ch. | Average % stock ch. last five recessions | Sector |
|---|---|---|---|---|
| Halliburton | -9.4% | -40.1% | Energy | |
| Boeing | -12.9 | -33.4 | Industrials | |
| Baker Hughes | 0.3 | -31.2 | Energy | |
| Schlumberger | 4.5 | -30.8 | Energy | |
| S&P 500 | -5.3 | -9.2 |
