Traders once priced in a dovish series of rate cuts for the year 2024, with a whopping six to look forward to. However, these expectations have dwindled, much like a deflating balloon at a children’s party. The resurgence of robust economic growth, stalwart labor statistics, and hotter-than-hoped-for inflation readings have caused a shift in anticipation, now limited to just four rate cuts.

Certainly, this shift makes perfect sense. With a formidable economy and labor market, and a looming risk of inflation resurging, why would the Central Bank be in a tearing hurry to slash interest rates?

Surprisingly, Fed Chair Jerome Powell firmly stated during the December meeting that the committee was projecting three cuts in 2024. It appears, however, that the market ran far ahead of itself. As a result, trader expectations have now simmered down, aligning more closely with those of policy makers.

The table indicates that the probability of a rate cut at the March and May meetings now sits below 50%. Just a month back, in March, the odds were at 77%, and the probability of a second cut in May was at a prevailing 71%.

With the shift in projections, the stock market is potentially teetering on the edge of a minor correction in the near future. If the rates market indeed starts pricing in higher interest rates, it could very well deal stocks a downward blow.

Consequently, I have compiled a list of three top-rated, defensive stocks that may weather a market correction admirably.

HCA Healthcare, a prominent for-profit operator in the health care sector, oversees a whopping 182 hospitals and more than 2,300 care sites across the US and UK. Renowned for its patient-centered care and wide range of services, spanning from basic urgent care to specialized hospital treatments, HCA Healthcare could provide a safe haven in times of market uncertainty. The healthcare sector is known for housing non-cyclical and defensive stocks, making it a top choice during periods of instability.

With a Zacks Rank #1 (Strong Buy) rating, HCA Healthcare boasts a stream of upward trending earnings revisions. Over the last two months, analysts have nearly unanimously raised their estimates, with an impressive 4.6% climb in FY24 estimates. Moreover, the stock has been forming a compelling bull flag in recent weeks, potentially signaling a substantial upturn if it crosses the $309 threshold.

The Progressive, a major player in the US auto insurance scene, ranks as the third-largest national carrier. The company’s array of insurance types includes Personal auto insurance, Commercial auto insurance, and Specialty insurance. The stock has earned a Zacks Rank #1 (Strong Buy) rating, a testament to its impressive share price performance and the rising trend in earnings revisions since last fall.

Additionally, with a projected annual EPS growth rate of 21% over the next 3-5 years and a PEG ratio standing at roughly 1x, The Progressive is reasonably valued based on this metric.

Dell Technologies, a leading provider of servers, storage, and PCs, presents secure, integrated solutions reaching from the edge to the core to the cloud. Enjoying a Zacks Rank #1 (Strong Buy) rating, the company has seen a consistent upward trend in earnings estimates since the first half of 2023.

Similar to The Progressive, Dell Technologies also boasts an enticing PEG ratio. With an anticipated annual EPS growth forecast of 12% over the next 3-5 years, the company appears to be in a favorable position in terms of valuation.