Is it the bear market?
Stocks dropped sharply Thursday with all three benchmark indexes losing ground. The Dow fell more than 458.13 points to 29,225.61 and the Nasdaq shed nearly 3% to 10,737.51 , the S&P 500 to a new low for the year, as fears swirled that a recession won’t stop the Federal Reserve from raising interest rates.
The sell-off was broad-based and was led by Apple, which tumbled as a major investment bank downgraded the one-time bear market outperformer. The stock closed down 4.9%.
The stock market had a promising start to the quarter, soaring in July. But fears about inflation, rate hikes, rising bond yields and recession returned with a vengeance in August and September.
It’s not just stocks that have tumbled. It’s the bear market for just about everything. Now where the investors will go this year ? Bond yields have surged, which means that prices are down. That weighs on returns.
Bonds are supposed to be safe havens during times of market and economic volatility. But two popular, widely held bond funds, the Vanguard Total Bond Market Index Fund ETF (BND) and iShares Core U.S. Aggregate Bond ETF (AGG), are both down nearly 16% in 2022.
Think gold is a good place to invest? But the price of the yellow metal is down 10% this year. And forget about cryptocurrencies. Bitcoin prices have fallen off nearly 60% in 2022.
Still, there are some winners even in this brutal market environment. Oil prices are up for the year, partly due to supply concerns in Europe resulting from Russia’s invasion of Ukraine. Energy giant Chevron (CVX) is the best performing stock in the Dow this year while Warren Buffett-backed Occidental Petroleum (OXY) leads the S&P 500.
Healthcare stocks, typically a defensive sector that holds up better during tough economic times, have done well too. Pharma giant Merck (MRK), biotech Amgen (AMGN) and insurer UnitedHealth (UNH) are all up this year and are the top stocks in the Dow after Chevron.
Let us see where the wind blows?