Investors Eye Amazon and Low Volatility Strategies Amid Market Jitters and Global Tensions

As market uncertainty grows, investors are exploring opportunities within the “Magnificent Seven” tech giants and searching for strategies to navigate rising volatility. Ongoing geopolitical concerns in the Middle East and mixed signals from the bond market are encouraging a more cautious, yet selective, approach to equities and fixed-income investments.

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Amazon (AMZN) is emerging as a standout pick in this climate, according to Jeff Kilburg of KKM Financial, who highlighted the company’s resilience even in choppy markets. He attributes Amazon’s year-to-date decline more to profit-taking than to any fundamental weakness.

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Kilburg expressed optimism about Amazon’s direction, particularly its continued innovation in custom semiconductor development and advancements in Amazon Web Services (AWS). “The way they are doing custom chips, the way they are approaching AWS … I’m excited,” he noted. While Kilburg previously voiced concerns about the overconcentration in the Magnificent Seven earlier this year, he now sees opportunity after the group’s recent repricing. “Right here, right now it makes sense,” he added.

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From a valuation perspective, Amazon currently trades at just under 32 times forward earnings, based on FactSet data. That’s a notable drop from its late-January level of nearly 38 times earnings, suggesting the stock has undergone a healthy correction and could be positioned for upside if fundamentals remain strong.

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While equity investors weigh their options, fixed-income strategists are turning their attention to the Treasury market. Philip Straehl of Morningstar sees intermediate-term bonds as a smart play in today’s market, particularly given fiscal policy uncertainties.

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“We like Treasurys as an investment, and we do favor the intermediate part of the curve,” Straehl said. He believes the ongoing debate in Congress over the budget bill will likely stir additional volatility, particularly on the long end of the yield curve. This makes the middle part of the curve an appealing compromise for investors seeking relative stability.

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However, Straehl also noted that short-term bonds could gain appeal if the Federal Reserve adopts a more hawkish stance than markets currently anticipate. Any indication of more aggressive rate hikes could shift investor focus toward shorter-duration debt instruments.

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Lauren Goodwin of New York Life Investments echoed concerns about bond market volatility, particularly at the long end. She pointed to a noticeable pullback in foreign investment as a key factor contributing to recent price swings. “The dynamic … is real, it is happening,” Goodwin said, referencing both retail and institutional investors who are beginning to question their international allocations, even marginally.

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While Goodwin does not expect the Fed to act immediately in response to these changes, she said the central bank could eventually step in as a “buyer of last resort” if Treasury market volatility becomes unsustainable. “We anticipate that dollar depreciation will continue on the margin … Treasury market volatility especially on the long end is a reality for investors,” she added.

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Leaning Into Low-Volatility Stocks and ETFs

Given the global uncertainty, some market experts are recommending a shift toward low-volatility equity strategies. Steve Sosnick, chief strategist at Interactive Brokers, advised investors to consider lower-beta stocks and exchange-traded funds (ETFs) that pay strong dividends.

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“Lower Beta, high dividend stocks are definitely a way to stay invested while insulating yourself,” Sosnick explained. “High Beta is great when the market is going up, but not when the market is floundering. If you want to stay invested, dividends provide a lot of ballast.”

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To take advantage of this defensive positioning, Sosnick pointed to two ETFs that have performed well in 2024: the Vanguard Russell 1000 Value ETF (VONV) and the Vanguard U.S. Minimum Volatility ETF (VFMV). Both funds have outperformed the S&P 500 so far this year, demonstrating the value of a lower-risk approach in turbulent conditions.

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VONV offers exposure to large-cap U.S. stocks with attractive value characteristics—typically companies that are well-established, financially sound, and offer reliable dividend payments. VFMV, on the other hand, targets equities with historically lower price volatility, making it an appealing choice for investors who want to stay in the market but reduce exposure to sharp price swings.

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As investors try to navigate market volatility spurred by Middle East tensions, shifting Fed policy expectations, and an unpredictable bond market, the focus is turning toward well-positioned tech names like Amazon and safer, income-producing strategies.

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Amazon’s pullback may offer a renewed entry point for long-term growth investors, especially as the company doubles down on custom chips and expands its cloud business. Meanwhile, intermediate Treasurys and low-volatility ETFs are gaining favor among those seeking relative safety without exiting the market entirely.

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In this environment, combining select growth plays with defensive income strategies may offer the best path forward for investors looking to balance opportunity with caution.

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