Medicare Agent News: New Nasdaq Bear Market

Tuesday, January 3, 2023

New Nasdaq Bear Market

By Nicholas Jasinski | Tuesday, October 11

Small Victories. The Dow Jones Industrial Average eked out a 0.1% gain today, good enough for its best day in a week. But the S&P 500 slid for a fifth-straight day, closing down 0.7%, to extend its losing streak to 5.3% over the past week. And the Nasdaq Composite dropped 1.1%, to re-enter bear market territory. The index is down more than 20% from its close on August 15 and at its lowest levels since July 2020.

All three indexes had been solidly in the green around midday, but slid through the afternoon. It's a volatile market out there, and there's plenty of angst about this Thursday's release of September inflation data—and what it might mean for Federal Reserve policy and the future path of interest rates. A hot print could justify more aggressive hikes when paired with last week's data showing continued strength of the U.S. labor market.

That, in turn, is bad news for stock and bond prices, and risks tipping the U.S. and global economy into recessions.

Economists from the International Monetary Fund put things in perspective today with their latest predictions for global gross domestic product in 2022 and 2023. Faced with soaring energy costs and other inflation, coordinated global monetary policy tightening, and a surging U.S. dollar, the outlook is less than bright.

Barron's Reshma Kapadia writes:

While the IMF maintained its forecast for 3.2% economic growth this year, the institution cut its estimate for 2023 to 2.7%, down from 2.9% in its July outlook. During a press briefing at the IMF’s annual meeting that brings together central bankers and finance ministers in Washington, D.C., IMF Chief Economist Pierre-Olivier Gourinchas warned that as painful as this winter may be, the winter of 2023 could be worse.

The IMF said growth could slow even more, falling below 2% as Russia’s invasion of Ukraine continues to destabilize the economy, inflation takes a greater bite, and China’s economic malaise persists. For example, a 20% to 30% spike in oil prices on the back of another supply shock could shave another half of percentage point of economic outlook globally next year. Not yet in its downside scenario: Another Covid variant that disrupts economic activity in countries that have gotten back to some version of normal.

For the U.S. economy in particular, the IMF expects GDP to expand 1.6% this year—down 0.7 percentage points from its earlier forecast—with just 1% growth next year. The IMF expects the European economy to expand by 3.1% this year and just 0.5% next year, and for China's economy to grow 3.2% this year and 4.4% next year.

It's not all about the macro, however. Third-quarter earnings season is about to kick off, bringing the attention back to individual companies and their performance. More on that below.