Defensive The opposite of cyclicals are defensive industries, those whose products and services are staples of everyday consumer life. People will buy them even in the middle of an economic recession. The earnings of these industries tend to be smoother and more predictable than those of the cyclicals. As a result, these stocks are often seen as a safe haven in a weak economic environment. Defensive industries include food production, tobacco, pharmaceuticals, and soft drinks.
Some industries grow at a significantly faster pace than the U.S. economy.
Examples from the past decade include medical equipment and computers. Companies on the cutting edge often see soaring stock prices, but those left behind may see their stock prices quickly fizzle. This includes some of the cyclical industries, such as automobile manufacturing and homebuilding, whose sales of big-ticket items are reliant on consumer financing. The operating results of banks are also sensitive to changes in interest rates. If rates go down, banks' cost of funds will likely decline, boosting earnings.