The S&P 500 is under renewed pressure following fresh trade tariffs, with many US growth stocks suffering losses. The index is now down 14% this year, with most of those losses occurring this month. Investors searching for more resilient opportunities in 2025 may want to look to defensive options.
Given the current market uncertainty, defensive growth stocks with broad-reaching international diversification may offer more stability. In particular, it may be worth looking for stocks with limited exposure to physical goods trade with the US.
Two major US-listed companies that stand out to me as worth considering are Microsoft (NASDAQ: MSFT) and McDonald’s (NYSE: MCD). Both have proven track records of weathering macroeconomic turbulence and offer compelling long-term potential.
Microsoft
Most tech shares aren’t doing well at the moment, particularly those linked to the semiconductor market. However, as a global technology leader, Microsoft benefits from multiple revenue streams that are largely insulated from direct trade tariffs.
Yet the price is down 14% this year so clearly it isn’t entirely immune to the issue. And even with that drop, it still has quite a high price-to-earnings (P/E) ratio of 29. There’s a risk it might struggle to make significant gains in the short term, at least until economic conditions improve.
But its cloud computing arm, Azure, continues to grow rapidly, while Office365 and Windows maintain high customer retention rates. For the fiscal year 2024, it posted a 16% increase in revenue to $245.1bn, with operating income rising 24% to $109.4bn.
McDonald’s
Arguably the world’s most popular fast-food chain, McDonald’s operates over 40,000 restaurants across more than 100 countries, generating around two-thirds of its revenue from outside the US. This broad geographic exposure helps mitigate the impact of trade policy, including potential tariffs on imported goods.
Of course, for such an international business, a key risk is currency fluctuations. US tariff policies are causing volatility in foreign markets, which can lead to unexpected exchange losses for the fast food chain. Labour shortages and wage inflation are other risk factors that may arise from new US policies.
Still, the company exhibits strong defensive qualities. Despite the recent challenging economic conditions, it managed to achieve full-year sales growth of more than £1bn in 2024. Its franchised business model also offers strong margins and predictable cash flow.
Consistent dividend growth is another strong sign. It recently increased them for the 48th consecutive year, revealing an unwavering commitment to shareholder returns. Although a yield of 2.36% might seem small compared to the UK average, it’s almost double the S&P 500 average.
Safe havens
While broader US markets may remain volatile amid trade policy uncertainty, some businesses have the scale, brand strength and pricing power to deliver steady performance. Microsoft and McDonald’s are worth considering as they each present unique advantages for adding defensiveness to a portfolio.
Their global reach, recurring revenue models and limited sensitivity to tariffs position them as potential safe havens in today’s rocky trade landscape. As always, a well-balancing portfolio of stocks is essential when aiming for stable, long-term growth.
