Medicare Agent News: A Historic Day for Bonds

Wednesday, September 28, 2022

A Historic Day for Bonds

By Alex Eule | Wednesday, September 28

England to the Rescue. Stocks snapped a six-day losing streak in dramatic fashion Wednesday, with the Dow Jones Industrial Average up 549 points, or 1.9%, for its best day since July. The rally came as bond prices rallied, sending yields significantly lower. The yield on the 10-year Treasury note fell 26 basis points, or 0.26 percentage point, to 3.707%. It's the largest one-day decline in the 10 year yield since March 18, 2009 -- just a few days after the S&P 500 hit its financial crisis bottom.

While Hurricane Ian was bearing down on Florida, investors were focused across the Atlantic where the Bank of England said it would buy long-dated bonds. The intervention is intended to stem a recent surge in yields and collapse in the price of the pound. The country's central bank left no doubt about its seriousness: "The purpose of these purchases will be to restore orderly market conditions. The purchases will be carried out on whatever scale is necessary to effect this outcome."

The message had its intended effect. The yield on the U.K.'s 10-year yield fell half a percentage point to 4.01%.

Today's bond moves -- both in the U.S. and the U.K. -- ordinarily take months, but these aren't ordinary times, with central banks across the world tightening monetary policy to deal with stubbornly high inflation. Yields have surged in recent months, setting the stage for today's downward move.

For one day, at least, U.S. stock investors went bargain hunting. Energy and communication services stocks were the biggest winners, with the sectors up 4.4% and 3.4%, respectively. It was a particularly good day for Netflix, which got an upgrade from Atlantic Equities. The brokerage firm sees significant opportunity for the streaming firm's upcoming launch of an advertising-supported subscription tier. "We see total advertising of $8 billion in 2025, or 17% of total company revenues," the firm wrote.

Just like the rest of the beaten-up market, Netflix shares jumped on the possibility of good news. The stock ended the day up 9.3%.

One company was strangely left out of the party: Apple fell 1.3%. It was the only decliner among the 30 companies in the Dow. That's a rare distinction for Apple. Since joining the Dow in March 2015, the company has been the lone decliner only one other time, on Dec. 22, 2015.

Apple was the second worst performer in the S&P 500. (Apparel maker V.F. Corp. was down 6.9%.)

Investors sold Apple stock after Bloomberg reported that the company wouldn't be making a previously planned boost to iPhone production. A few Wall Street analysts pushed back on the story, noting that initial iPhone 14 sales looked strong, with consumers flocking to Apple's pricier "Pro" model.

Apple, with its massive market value of nearly $2.5 trillion, makes up about 7% of the S&P 500. That makes today's rally all the more impressive. The S&P 500 finished up 2%, while the Nasdaq Composite rose 2.1%.