The United States economy is currently perceived to be entering a phase of "continuous stagflation," a term that describes a troubling economic condition characterized by persistent inflation coupled with very low growth rates and high unemployment. This complex economic backdrop raises significant concerns for both policymakers and investors alike.

One of the key indicators monitored by the Federal Reserve to gauge market conditions is the Cboe Volatility Index, commonly referred to as the VIX. This index measures the markets expectations of future volatility, with a reading of 20 or higher signaling a heightened level of anticipated price fluctuations across financial markets. As of now, the VIX stands at a concerning 32.64%, illustrating the market's unease about the current economic climate.

Amid this uncertainty, the Federal Reserve has opted to maintain interest rates in the range of 4.25% to 4.50%. During a recent dinner event hosted by the Economic Club of Chicago, Federal Reserve Chairman Jerome Powell remarked, "For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance." This statement underscores the cautious approach the Fed is taking amidst the evolving economic situation.

The backdrop of economic uncertainty is further complicated by the geopolitical tensions surrounding trade with China. In February 2025, the U.S. government imposed its first round of tariffs specifically targeting Chinese imports, a strategic move aimed at mitigating the impact of DeepSeek, a Chinese-developed artificial intelligence software that poses a significant competitive threat to American tech companies. By March of the same year, President Trump had announced an eye-watering 54% tariff on a wide range of Chinese goods. In retaliation, China implemented its own tariffs at a rate of 34% on U.S. products and services.

According to a report from CNBC, the overall tariff rates applied on Chinese goods have surged to a staggering 145% as of April 11, 2025, while China has retaliated with tariffs reaching 125% on American exports. This tit-for-tat trade war has created an atmosphere of uncertainty in the markets, particularly impacting the technology sector.

The early months of 2025 have been tumultuous for the U.S. stock market, with increased volatility and negative performance across major indices. The confluence of adverse economic data, lackluster tech stock performance, and ongoing trade tensions has contributed to this market turbulence.

In light of these financial dynamics, a recent article identified the "10 Best Low Volatility Stocks to Buy Now," highlighting stocks that can potentially provide stability amidst the ongoing market fluctuations. In this context, Eli Lilly and Company (NYSE:LLY) has emerged as a focal point worth examining against other low volatility investment opportunities.

Investors are increasingly advised to consider low-risk stocks as a strategy to navigate through these turbulent economic waters. Stocks with low volatility have shown resilience, outperforming the broader market and proving advantageous during these uncertain times. After two consecutive years of mediocre growth, this investment strategy has surfaced as the most effective theme of 2025 among the 13 strategies tracked by Bloomberg Intelligence. Joe Gilbert, a portfolio manager at Integrity Asset Management, emphasized the necessity for investors to seek refuge in lower volatility stocks, stating, "Investors are going to have to live with volatility at least for the remainder of this year. The lower volatility names are the place for investors to hide."

To identify promising low volatility stocks, the research methodology employed included scrutinizing 20 companies with a five-year monthly beta ranging between 0.2 and 0.8, using the Yahoo Finance stock screener. Additionally, Insider Monkeys proprietary database of hedge fund holdings from Q4 2024 was tapped to identify the 10 most popular stocks among hedge fund managers, ranked by their respective positions.

Insider Monkey has a keen interest in tracking hedge funds, as research has shown that mirroring the top picks of leading hedge funds can yield better-than-average market returns. The strategy behind this quarterly newsletter is to select a diverse array of small-cap and large-cap stocks, which has resulted in a remarkable return of 373.4% since May 2014outpacing the benchmark by an impressive 218 percentage points.

Turning our attention specifically to Eli Lilly and Company (NYSE:LLY), it is imperative to note that this global pharmaceutical giant is dedicated to the discovery, development, and marketing of innovative human pharmaceuticals. LLY boasts a wide array of treatments across numerous therapeutic areas, including various insulin formulations under the Humalog and Humulin brands, alongside newer medications such as Jardiance, Mounjaro, Trulicity, and Zepbound that cater to obesity and type 2 diabetes.

While the pharmaceutical sector has historically enjoyed some immunity from direct tariff impacts, the broader repercussions of ongoing trade tensions and potential future tariffs could adversely affect LLY's operations. Eli Lilly actively collaborates with several pharmaceutical and biotechnology companies, including Incyte, Boehringer Ingelheim, and Roche, to enhance its research and development across a diverse array of therapeutic pipelines. The company markets its products not only in the United States but also across Europe, China, Japan, and other international markets. To mitigate the negative consequences of new tariffs on profit margins, Eli Lilly is strategically establishing local manufacturing facilities to alleviate concerns about supply chain disruptions.

In terms of corporate growth, Eli Lilly has made significant strides recently, having completed eight acquisitions and signed three strategic agreements over the past 27 months. The companys latest acquisition was of Scorpion Therapeutics in January 2025, showcasing its commitment to expanding its reach.

Eli Lilly's stock has seen a notable uptick following the successful completion of a Phase 3 trial for orforglipron, its once-daily oral GLP-1 medication, which met both its primary and key secondary endpoints for patients dealing with type 2 diabetes. This positive news has fueled investor optimism regarding Lilly's competitive edge in the burgeoning obesity drug market.

Currently, LLY ranks fourth on the list of the best low-volatility stocks to consider for investment. While the potential of LLY is acknowledged, analysts believe that AI-focused stocks may present even more lucrative opportunities for higher returns in shorter timeframes. For those looking at promising AI investments, there is reportedly one AI stock that has gained traction since the start of 2025, even as many popular AI stocks experienced a decline of around 25%. If you're interested in discovering this undervalued AI stock that trades at less than five times its earnings, further insights can be found in our detailed report.

In conclusion, as economic conditions evolve, investors are advised to stay informed about potential investment opportunities, including low-volatility stocks and emerging sectors like artificial intelligence. For additional reading, consider checking out our articles on the "20 Best AI Stocks To Buy Now" and the "30 Best Stocks to Buy Now According to Billionaires."

Disclosure: None. This article was initially published at Insider Monkey.