Last year’s familiar fears are still haunting investors. The oil price slump has dominated proceedings for most of the month, dragging down broader markets. Meanwhile, fears about China’s economy may have receded into the background for now, but the country continues to suffer from its inherent structural weaknesses.

As a result, all S&P 500 sectors are languishing in the red on a year-to-date basis. In such a scenario, defensive choices like utilities acquire special significance. Incidentally, the Utilities Select Sector SPDR ETF (XLU) has incurred the lowest losses for the year, declining only 0.3% on a year-to-date basis. This is why it would be wise to add some of these stocks to your portfolio in order to protect yourself from the regular headwinds.

Oil Plunges Lower

WTI Crude hit a new low on Tuesday, declining below the $30 level for the first time in more than 12 years. It managed to recover quickly, if only marginally, to close at $30.44 a barrel. This was the lowest level at which it has finished since Dec 1, 2003. Brent Crude also followed suit, falling to $30.86, its lowest finish since Apr 2004.

A supply glut and flagging demand have resulted in a demand supply gap which is only widening. And there seems to be no letting up at either end. Producer blocs and major oil exporting nations alike are determined to pump more oil. Meanwhile, demand from major importers such as China is continually declining.

China Fears Refuse to Simmer Down

Which brings us to China, the market’s other bugaboo. Despite a few promising signs now and then, the country’s economy remains in the doldrums. Broader markets had declined last Thursday after China’s central bank guided the yuan to a five-year low in off-shore trading on Wednesday. This dampened investor sentiment, indicating that weaknesses in China’s economy would intensify.

China’s markets recovered on Friday after the securities regulator discontinued its “circuit breaker” mechanism. But markets have closed at their lowest level since Aug 26, 2015, despite encouraging trade data. This positive report and steps taken to stabilize the country’s currency seem inadequate in the face of inherent economic weaknesses.