Medicare Agent News: It's Ugly Out There

Tuesday, September 27, 2022

It's Ugly Out There

By Nicholas Jasinski | Monday, September 26

Sea of Red. The Dow Jones Industrial Average fell into a bear market today, down more than 20% from its early January record close. The S&P 500 dropped to its lowest level since December 2020, and the Nasdaq Composite is down more than 6% in a week. All three indexes have declined for five straight trading days. It's ugly out there for U.S. stock investors.

Some 458 S&P 500 constituents fell today, as 10 of 11 sectors lost value. The index finished the day down 1.0%, the Dow dropped 1.1%, and the Nasdaq fell 0.6%. Investors' collective expectation for volatility going forward jumped, with the CBOE Volatility Index, or VIX, rising almost 8%, to more than 32 points—its highest since June.

The STOXX Europe 600 index slid 0.4% today, to extend a bear market and likewise close at its lowest value since late 2020. Japan's NIKKEI 225 index dropped 2.7%, China's Shanghai Composite slid 1.2%, and South Korea's KOSPI Composite lost 3.0%. It's ugly out there for non-U.S. stock investors.

Treasury yields continued to rise, as the price of the securities declined. The 2-year U.S. Treasury note yield rose 0.10 percentage point, to 4.32%, today. The 10-year U.S. Treasury note yield rose 0.18 percentage point today, to 3.88%. Prices of corporate bonds, mortgage-backed securities, and foreign government bonds slipped today, as their yields rose. It's ugly out there for fixed-income investors.

Oil prices continued to slide, with West Texas Intermediate crude off 2.6%, to $76.71 a barrel. The price is down 8.1% over the past two trading days. Gold fell 1.3% today, to $1623 an ounce. Silver, copper, and other metals likewise lost value today. It's ugly out there for commodities investors.

The British pound continued its shocking decline today, falling to as low as $1.035 versus the U.S. dollar, down a whopping 4.7% on the day to a record low. Sterling rebounded by the afternoon, to trade down 1.3% on the day, near $1.065 per pound. The declines have come after the newly installed U.K. government unveiled its economic plan late last week, featuring both higher spending and tax cuts, and requiring more borrowing and bond issuance. The euro, yen, yuan, and several other major currencies lost value against the dollar today, as the U.S. Dollar Index, or DXY, rose another 0.8% to a multi-decade high. It's ugly out there for...you know the drill.

The bright side in the sea of red on investors' screens these days is that assets are getting cheaper, presenting an opportunity for greater returns in the future. But that takes a formidable sense of perspective.

And investors may want to hold on to their excess cash for a bit longer. There's still rough sailing likely ahead, and an even better entry point may well present itself. More on that below.