By Teresa Rivas
Consumer staples: Reliable, dependable -- and a thing of the past?
This year has been anything but humdrum, from artificial intelligence upheaval to the war in the Middle East. It should be the perfect setup for staples to shine with their steady-eddy model, but that's not what's happened, leaving skittish investors adrift.
It's true that staples have had a decent 2026: The State Street Consumer Staples Select Sector SPDR exchange-traded fund is up more than 7% year to date, compared to a less than 4% rise for the S&P 500. However, zooming out presents a different picture. XLP has edged up around 3.5% in the past year, and has gained an anemic 20% over the past five years. By contrast the S&P 500 is up roughly 29% and 71%, respectively, over the past one- and five-year periods.
The problem isn't just that the sector has underperformed. Staples lagging the broader market during a years-long rally -- when interest rates remain elevated and a risk-driven rally has led all three major indexes to fresh highs -- is somewhat expected. After all, there's little motivation to buy potato chip makers when semiconductor chip makers deliver such astronomical returns.
The bigger issue is that investors who stuck with staples, foregoing bigger gains in hopes they would provide a smoother ride, have been sorely mistaken. As Stephens analyst Melissa Roberts notes, so far in 2026, the consumer staples sector has had plenty of volatility, with 58% of stocks showing above-average movement.
That's a big departure from the past. Previously, staples were one of just four sectors -- along with utilities, real estate and financials -- that offered lower than market risk, she notes. Yet in 2026, those other three sectors saw volatility that roughly matched their historical levels, while staples volatility spiked. Only about a third of utilities, real estate and financial stocks are seeing above average volatility, compared to that 58% figure for staples.
This leads to a vicious cycle, Roberts writes, as she thinks that "the combination of elevated single-stock volatility and a relatively small index weighting for the sector has contributed to bifurcation within the group. It appears investors have concentrated positioning in a narrow set of low-volatility staples names while stepping back from those exhibiting higher realized volatility."
Overall, that volatility has likely turned some investors off entirely, and those that remain are pickier, leading the most volatile staples stocks to trail their more stable peers and take bigger hits from bad news.
The upshot is that this crowding "tends to amplify the very volatility investors are trying to avoid in the first place," Roberts concludes. "We believe it also helps explain why narrative risk...has been whipsawing individual names more violently this year."
Among the 10 staples stocks with the most volatility year to date through Monday, eight are down so far this year -- Ispire Technology, Hain Celestial Group, SkinHealth, Waldencast, Grocery Outlet, HF Food Group, Turning Point Brands, BellRing Brands.
By contrast, all 10 of the least volatile staples stocks -- Ingredion Incorporated, Coca-Cola Company, Costco Wholesale, Procter & Gamble, Tootsie Roll Industries, PepsiCo, National Beverage Corp, Church & Dwight, Corteva, and Dole -- are in the black year to date. Casey's General Stores, a recent Barron's pick , makes the top 20, and is up some 45% since the start of the year.
It just goes to show that boring can be beautiful.
Write to Teresa Rivas at teresa.rivas@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 28, 2026 16:14 ET (20:14 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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