By Paul R. La Monica

It's an ugly day for the markets and it's getting harder to find places to hide. As fears grow about a long, drawn-out conflict in Iran, investors are worried that a spike in oil prices will hurt the global economy and reignite inflation concerns. That's particularly problematic for the formerly red-hot artificial-intelligence trade.

"A renewed burst of inflation -- akin to what we saw in 2022 and 2023 in the fall-out from the Russia-Ukraine War -- could upend global growth this time because of the dependence of the AI-based growth technologies upon cheap energy and electricity," said Thierry Wizman, global FX and rates strategist at Macquarie Group, in a report Tuesday.

But opportunities remain for investors willing to sift through the wreckage on Wall Street. Consider playing defense. Still, even some of the typical havens investors turn to in volatile markets were getting hit hard in Tuesday's sell-first, ask-questions-later pullback. Just look at gold.

The yellow metal was down along with most other assets. But gold is still up nearly 20% this year. Gold miners such as Newmont, Agnico Eagle Mines and AngloGold Ashanti -- top holdings in the VanEck Gold Miners exchange-traded fund -- have soared in 2026 as well. The ETF remains up more than 20% this year, even though the miners were getting shellacked Tuesday. And gold could rebound if the U.S. dollar resumes its recent decline.

The energy sector is another place investors can flock to for relative safety. Major oil companies like Exxon Mobil and Chevron, now trading near all-time highs, should continue to benefit from rising crude prices. So could oil and natural-gas pipeline providers such as Valero and Williams Companies.

Aerospace and defense stocks are getting a lift from geopolitical volatility as well. RTX, Lockheed Martin, Northrop Grumman, L3Harris Technologies, and Honeywell are near record highs.

"A multi-week air campaign should be good for defense technology firms as the U.S. is deploying new weapons systems like one-way drones and using advanced intelligence systems for target selection. At a minimum, weapon stocks will be depleted and have to be rebuilt," said Scott Helfstein, head of investment Strategy at Global X, in a report late Monday.

Investors might want to consider income plays. Verizon, which pays a dividend that yields 5.6%, was one of the top gainers in the Dow Jones Industrial Average midday Tuesday and was one of only ten Dow stocks in the green.

Consumer-staples stocks, known for their steady yields, have also outperformed this year. But investors should be wary of stocks like Coca-Cola, Philip Morris International, and Procter & Gamble as valuations are now lofty.

Still, John Davi, founder and CEO of Astoria Portfolio Advisors, said dividends make sense amid heightened uncertainty. "Investors are rediscovering the importance of getting paid upfront," he wrote in a report. "Dividend growers, our year-to-date leader among core equity strategies, reflect the power of durable cash flows and disciplined capital allocation."

Bonds could provide jittery investors with a modicum of safety and income as well. Hopes for more interest rate cuts by the Federal Reserve over the next few months are fading, in part because of rising oil prices. That dynamic could keep bond yields elevated. The U.S. 10-year Treasury yield moved back above 4% Tuesday after sliding for much of February.

John Sheehan, manager of the Osterweis Strategic Income Fund, told Barron's that days like Tuesday highlight the need for steady income. "This is a market that proves the value of that," he said, adding that "inflation still looks sticky at best."

So-called alternatives funds, which aim to mimic market-neutral strategies of hedge funds designed to minimize volatility, could be a good bet too. The iMGP DBi Managed Futures Strategy ETF, Simplify Managed Futures Strategy ETF and the KraneShares Mount Lucas Managed Futures Index Strategy ETF are all outperforming the broader market this year. But they, too, fell Tuesday.

Until there is more clarity on how the Iran conflict unfolds, markets are likely to see more broad-based selloffs. The key is identifying stocks and funds that may have been overly punished despite solid longer-term fundamentals.

Write to Paul R. La Monica at paul.lamonica@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

March 03, 2026 14:32 ET (19:32 GMT)

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