Recession fears gripped Wall Street after a downbeat U.S. job report sparked huge selling across stocks. The three major indices closed in deep red in the last trading session. The S&P 500 saw its worst reaction to jobs data in almost two years, dropping 1.8% on Friday, while the Dow Jones lost 1.5%. 

Downbeat forecasts from Amazon (AMZN) and Intel (INTC) exacerbated the downside in the technology sector, pushing the tech-heavy Nasdaq Composite index into correction territory. The tech-heavy index lost 2.4% in the last trading session (read: Amazon's Weak Sales Spoil Investors' Mood: ETFs in Focus). 

The extensive sell-off has prompted investors to reassess their portfolios, leading to higher demand for safe and defensive assets. As a result, we have highlighted five such zones and their popular ETFs where investors could stash their money amid the current turbulence. The ETFs are iShares Edge MSCI USA Quality Factor ETF (QUAL Quick QuoteQUAL - Free Report) , Vanguard Value ETF (VTV Quick QuoteVTV - Free Report) , SPDR Gold Trust ETF (GLD Quick QuoteGLD - Free Report) , Vanguard Dividend Appreciation ETF (VIG Quick QuoteVIG - Free Report) and iShares 20+ Year Treasury Bond ETF (TLT Quick QuoteTLT - Free Report) .

The labor market cooled in July as the economy added 114,000 jobs, 35% fewer than expected. Unemployment rose to 4.3% — the highest since October 2021 — and represented the fourth consecutive monthly increase. Meanwhile, U.S. manufacturing activity dropped to an eight-month low in July amid a slump in new orders.

Traders are betting that the U.S. economy has lost steam and is on the verge of sliding toward a recession, given rising unemployment, high interest rates and fading confidence in the tech sector. Economists across Wall Street are projecting a more aggressive pace of Fed easing, with those at Citigroup and JPMorgan Chase predicting half-percentage-point moves at the September and November meetings.

Let’s delve deep into the ETFs:

Quality - iShares Edge MSCI USA Quality Factor ETF (QUAL Quick QuoteQUAL - Free Report)

Quality stocks are rich in value characteristics with a healthy balance sheet, high return on capital, low volatility, elevated margins, and a track of stable or rising sales and earnings growth. These products thus reduce volatility when compared to plain vanilla funds and hold up rather well during market swings. 

With AUM of $47.1 billion, iShares Edge MSCI USA Quality Factor ETF provides exposure to large and mid-cap stocks exhibiting positive fundamentals (high return on equity, stable year-over-year earnings growth and low financial leverage) by tracking the MSCI USA Sector Neutral Quality Index and holds 125 stocks in its basket. The ETF charges 15 bps in annual fees and trades in an average daily volume of 964,000 shares. It has a Zacks ETF Rank # 2 (Buy).

Value – Vanguard Value ETF (VTV Quick QuoteVTV - Free Report)

Value stocks have proven to be outperformers over the long term and are less susceptible to trending markets. These stocks have strong fundamentals — earnings, dividends, book value and cash flow. These have the potential to deliver higher returns and exhibit lower volatility compared with their growth and blend counterparts. 

Vanguard Value ETF targets the value segment of the broad U.S. stock market and follows the CRSP US Large Cap Value Index. It holds 342 stocks in its basket with AUM of $122 billion and charges 4 bps in annual fees. The ETF trades in a volume of 2 million shares per day on average and has a Zacks ETF Rank #1 (Strong Buy).

Gold - SPDR Gold Trust ETF (GLD Quick QuoteGLD - Free Report)

Gold is viewed as a haven or a store of value in times of economic or political turmoil. Additionally, a lower interest rate environment raises the demand for gold, as the precious metal does not pay any interest, making it more appealing than alternative investments like bonds (read: Gold Hits Record High: 5 Reasons ETFs Could Rally Further). 

As such, the ultra-popular product tracking this bullion, like GLD, could be an interesting pick. SPDR Gold Trust ETF tracks the price of gold bullion measured in U.S. dollars, and kept in London under the custody of HSBC Bank USA. It is an ultra-popular gold ETF with AUM of $66 billion and heavy volume of about 5.5 million shares a day. SPDR Gold Trust ETF charges 40 bps in fees per year from investors and has a Zacks ETF Rank #3 (Hold).

Dividend - Vanguard Dividend Appreciation ETF (VIG Quick QuoteVIG - Free Report)

Dividend-paying securities are major sources of consistent income for investors when returns from the equity market are at risk. This is especially true as these stocks offer the best of both these worlds — safety in the form of payouts and stability in the form of mature companies that are less volatile to large swings in stock prices. The companies that offer dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis. 

While the dividend space has been crowded, ETFs with stocks having a strong history of dividend growth, like VIG, seem to be good picks. The ETF has AUM of $82 billion and trades in a volume of 740,000 shares a day on average. It charges 6 bps in annual fees and has a Zacks ETF Rank #2 (read: Time to Buy High-Dividend ETFs?). 

Long-Dated Treasury - iShares 20+ Year Treasury Bond ETF (TLT Quick QuoteTLT - Free Report)

The products tracking the long end of the yield curve often provide a haven. iShares 20+ Year Treasury Bond ETF tracks the ICE U.S. Treasury 20+ Year Bond Index, holding 45 securities in its basket. The fund has an average maturity of 25.61 years and an effective duration of 16.70 years. iShares 20+ Year Treasury Bond ETF charges 15 bps in annual fees. 

TLT is one of the most popular and liquid ETFs in the bond space, with AUM of $57.2 billion and an average daily volume of 32 million shares.

Bottom Line

These products could be worthwhile for low risk-tolerant investors and have the potential to outperform the broad market, especially if global growth fears continue to dampen sentiments.