With markets reacting negatively to concerns about a weakening U.S. economy, investors might do well to look at the consumer staples sector, according to Standard & Poor's equity analyst Thomas Graves in a new report released Tuesday.

Graves said that S&P’s equity strategy recommends overweighting consumer staples, which currently represent 10.7% of the S&P 500 Index. 

The sector, he notes, is up 4.5% year to date, which is a lot more than the S&P 500 overall, which shows a gain of just 2.75% since January 1.

Graves expects to see global sales increase for consumer staples thanks to higher marketing expenditures by companies and increasing demand in developing economies -- although these gains will be limited by rising commodity prices and by continued high unemployment in the U.S. which leads consumers to shift to private label products and away from brand named goods.

Another plus for consumer staples: its constituent stocks tend to pay more dividends than the broader market.  The sector’s yield is averaging 3%, compared to just 2% for the whole S&P.

Graves said he expects the sector to show strong cash flow, with some of that money being used to support dividends and stock repurchases. Also, he is looking for companies to bolster earnings and cash flow through cost reduction or restructuring programs.

The consumer staples sector is sub-divided by S&P into 12 categories, with soft drinks and household products being the two largest of late.

Graves said, “We view exchange-traded funds (ETFs) as one way to gain investing exposure to consumer staples.”