The stock market took another step lower Friday, as Reserves yields nonstop to rise to levels not seen in over a decade.
Today’s drop brought the Dow below the vital 30,000 mark and this close to bear-market territory, which is defined as a 20% drop from the most recent high (or its Jan. 3 peak at 36,585.06, in this case). The blue-chip index is the only one of its major market peers to have not crossed that threshold (the Nasdaq, dredge up, entered a bear market on March 7, and the S&P 500 on June 13).
“Fiscal markets are now fully absorbing the Fed’s harsh message that there will be no retreat from the inflation fight,” says Douglas Porter, chief economist at BMO Capital Markets. “The steep back-up in global rates further bludgeoned stocks, store prices, and commodity currencies this week, given mounting depression odds,” he added.
While yields on regime bonds came off their earlier highs, they are still floating at levels not seen in over 10 years (2011 for the 10-year note and 2007 for the two-year). Particularly, the 10-year Reserves yield hit a session peak of 3.829% before settling at 3.695%, while the 2-year Reserves yield climbed as high as 4.27% before ending at 4.201%.
As for the equities market, the Dow Jones Manufacturing Average closed down 1.6% at 29,590 – ending less than 1% above the 29,278.05 it needs to fall below in order to enter a new bear market. The S&P 500 Index refined 1.7% lower at 3,693 and the Nasdaq Composite spiraled 1.8% to 10,867. The S&P and Nasdaq refined at their lowest levels since June, while the Dow notched a new year-to-date low.
Other news in the stock market today:
- The small-cap Russell 2000 plummeted 2.5% to 1,679.
- U.S. crude futures spiraled 5.7% to $78.74 per barrel, its lowest close since Jan. 10.
- Gold futures shed 1.5% to end at $1,655.60 per ounce, their lowest agreement since April 2020.
- Bitcoin slumped 2.6% to $18,823.30. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Costco Indiscriminate (COST) got knocked down 4.3% after return. In its fiscal fourth quarter, the indiscriminate seller reported return of $4.20 per share on $72.1 billion in revenue, more than analysts were in the family way. Same-store sales were up 13.7% year-over-year, matching the consensus assess. “COST is seeing some signs of inflation relief as steel prices have eased and container shortages and port delays have stuck-up,” says BofA Securities analyst Robert Ohmes (Buy). “In addendum, the stronger U.S. dollar should help allay some of the import pricing pressures. But, there is probable to be nonstop ‘gumminess’ in recent CPG company price increases (still rumor has it that supported by the rising wage background). In addendum, there are no point examples of easing inflation in COST’s Food & Assortment category.”
- FedEx (FDX) gave back 3.4% after the shipping giant announced a round of rate hikes for its Express, Ground and Home Manner of language air force, and said it is targeting fiscal 2023 cost savings of $2.2 billion to $2.27 billion. This comes on the heels of FedEx’s return warning last week, which sent shares reducing. “FDX is now (slowly) parking freight planes and adornment staff and conveniences, which should improve in commission margin from August station dismal 5.3% (vs. 6.8% year-over-year),” says CFRA Investigate analyst Colin Scarola (Hold). “But with highly precarious macroeconomic circumstances and new FDX management seeming slow to react, we urge a neutral stance on shares despite historically low appraisal.”
Are These the Best Stocks to Buy Now?
Is now the time to buy stocks? It’s a inquiry that has divided Wall Street – and one that can only be answered with time. But no matter what, “noteworthy declines are a regular and recurring feature of the stock market,” says Brad McMillan, chief investment officer for Commonwealth Fiscal Network. “In that context, this one is no uncommon. And since it is no uncommon, then like every other decline, we can practically expect the markets to bounce back at some point.”
And while a bear market gives investors plenty of reasons to worry and makes small-term pain, it also “gives a chance to buy stocks on sale, potentially leading to better future returns when it recovers,” McMillan adds. “And, as always, a bear market gives investors a chance to take a excellent hard look at their portfolios and find out if they are really comfortable with the risk they are taking. The pain is real, but there are some clear side effects.”
Many investors will choose to go to cash amid this explosive nature. But for those looking to find huge bargains in the stock market, there are surely plenty of names trading much lower than where they started the year. But finding the best stocks to buy when the market is selling off can be demoralizing, so we turned to the pros to find a list of their top high-conviction picks – each probable to rally at least 20% in the next 12 months or so. Check them out.