Top 20 Stocks to Weather August Volatility on Wall Street

investing.com:

Cracks are starting to emerge in the year-to-date rally on Wall Street as sentiment took a turn for the worse following Fitch's downgrade of the top-tier U.S. credit rating this week.

Fitch Ratings cut the U.S.’s long-term debt outlook to ‘AA+’ from ‘AAA’ late Tuesday, citing “expected fiscal deterioration over the next three years” as well as growing government debt.

Fitch became the second major agency to strip the U.S. of its prized triple-A sovereign debt rating after Standard & Poor’s did so in August 2011.

Traders' immediate reaction to the news was to sell out of stocks and pile into the relative safety of U.S. Treasuries.

The latest upsurge in bond yields triggered a violent selloff on Wall Street, with the S&P 500 suffering its first three-day losing streak in months. The benchmark index posted its biggest daily percentage drop since April 25 on Wednesday, falling by more than 1%.

Meanwhile, the Nasdaq Composite recorded its worst one-day drop since February, as tech names that have led the market higher so far this year sold off on heavy volume.

All things considered, a higher 10-year Treasury yield tends to weigh on equity valuations, particularly for growth stocks, as it threatens to erode the value of their longer-term cash flows.

The release of the upcoming U.S. consumer price inflation report on Thursday, August 10, could mean heightened uncertainty and volatility continuing throughout next week.

The consensus estimate is that the data will show headline annual CPI cooling to 2.8% in July from the 3.0% increase seen in June.

The headline annual inflation rate peaked at a 40-year high of 9.1% last summer and has been on a steady downtrend since, however, prices are still rising at a pace well above the