The consumer staples sector (including food and beverage stocks) has successfully grabbed investors' attention, of late. Nevertheless, amid a sound U.S. economic picture and an upbeat consumer confidence data, aspects such as heightened geopolitical tensions due to North Korea's slew of nuclear tests or uncertainty regarding President Trump's policies has made investors skeptical.

Over the last few months, companies in the consumer staples sector have been countering several challenges like intense competition, input cost inflation, and tight margins. Notably, food deflation added to the woes over the past year, where a supply glut in some types of food — particularly meat, poultry, and dairy — dragged down prices and forced several companies resort to aggressive promotional activities.

Will U.S. Tax Cuts be a Game Changer?

A section of market observers feels that added stimulus could actually be counterproductive for an economy which is operating almost at its full capacity and undergoing near-full-employment levels. Such a state has been upheld in an ultra-low rate environment, comprising sluggish inflation rate.

However, tax cuts might escalate inflation rates, which, in turn, might compel the Federal Reserve to initiate sharper and faster rate hikes. Such an outcome might depress the equity universe and persuade investors to park money in the safe-haven sectors such as utilities and consumer staples.