3 trades keeping investors in the green this year as the S&P 500 corrects
- The S&P 500 has shed 4% since the beginning of the year as Big Tech stocks decline.
- However, previously unloved areas of the market like healthcare are rebounding.
- Gold and European stocks are also rallying.
Tariff volatility, mounting recession fears, and uncertainty around the AI trade have rocked markets this year — pushing the S&P 500 into correction territory last week.
But amid the stock-market sell-off, there are still pockets of outperformance.
“Anything with a more moderate valuation profile to start the year has done well,” Phillip Nelson, head of asset allocation at the investment consulting firm NEPC, said. “Areas less impacted by the headlines associated with tariffs seem to have weathered some of the uncertainty of the last several months.”
Investors who diversified their portfolios outside last year’s winners, such as the Magnificent Seven and US stocks, have fared better during the stock market pullback. Here are a few trades that have delivered positive returns this year.
Gold
Gold breached $3,000 last week, an all-time high, as investors looking for a safe asset piled in.
“Gold tends to thrive when there’s uncertainty elsewhere in the markets, and that’s what we’re seeing right now with the volatility produced by the tariffs,” George Milling-Stanley, State Street’s chief gold strategist, told Business Insider. “There was some thought that perhaps the tariffs might just be a bargaining chip and might just be used as leverage, and then all of a sudden we have real tariffs coming.”
With increased recession and stagflation fears, Milling-Stanley thinks the high price of gold is here to stay and predicts there’s still room for it to go up to $3,100 by year-end.
Brian Buetel, a managing director at UBS Wealth Management, believes gold is a great way to protect your portfolio from geopolitical tensions and economic weakness. Nelson has also been recommending his clients add gold and other real assets to their portfolios.
“Any properly balanced investment portfolio could benefit from a long-term strategic allocation of somewhere between 2-10%,” Milling-Stanley said. It may sound drastic, but in this market environment, Milling-Stanley believes doubling your gold allocation could be appropriate.
Investors can add gold to their portfolios through funds such as iShares Gold Trust (IAU) and the SPDR Gold Shares fund (GLD).
Healthcare stocks
Healthcare, one of last year’s stock market losers, is doing quite well in 2025 as investors rotate into more defensive areas of the stock market, Beutel pointed out . The Health Care Select Sector SPDR Fund (XLV) is up 6.6% year-to-date.
Beutel attributes the sector’s resilience to patients resuming elective surgeries that they delayed during the pandemic, as well as new drug innovations.
Specifically within healthcare, Wall Street is eyeing pharmaceutical businesses. Morgan Stanley points out the NYSE Arca Pharmaceutical Index (DRG), which represents the performance of large-cap US pharmaceutical companies, is up nearly 7% in 2025.
Terence Flynn, equity analyst at Morgan Stanley, points out that US prescription drug trends have historically been resilient in times of recession, with large-cap biotech companies maintaining operating margins and free cash flow.
“We expect resilient biopharma revenues if economic activity slows,” Flynn wrote in a recent note.
European stocks
As US stocks struggle this year against concerns of slowing economic growth, stocks on the other side of the ocean have thrived.
With Trump taking a more hands-off approach to foreign involvement, European countries are boosting their defense spending as a percentage of GDP, and European stocks are responding well. The EURO STOXX 50 index, which tracks European blue-chip stocks, has posted an 18% gain this year.
And Germany’s DAX index has been an especially big standout, returning almost 23% this year in what UBS calls the “German Renaissance” trade. The country is currently in talks to pass a major fiscal package to boost infrastructure and defense spending.
Within the index, top-performing stocks include Rheinmetall (RNMBF) and BAE Systems (BAESF), two prominent defense companies. They’ve gained 122% and 42% this year, respectively.
“Sentiment in regards to European equities to start the year was relatively poor, and to some degree, hard for more bad news to get priced into the stocks,” Nelson said, making it the perfect backdrop for a rally once the US market hit a speedbump.