Stock market today: The Dow plunges 486 points and approaches the bear market
The stock market took another step back on Friday as Treasury yields continued to rise to levels not seen in more than a decade.
Today’s fall has taken the Dow below the all important 30,000 mark and this close to bear market territory, which is defined as a 20% decline from the most recent high (or its January 3 peak at 36,585.06, in this case). The blue-chip index is the only one of its major peers not to have crossed that threshold (the Nasdaq, remember, entered a bear market on March 7 and the S&P 500 on June 13).
“Financial markets are now fully absorbing the stern message from the Fed that there will be no backing down in the fight against inflation,” said Douglas Porter, chief economist at BMO Capital Markets. “The sharp rally in global rates has pummeled equities, resource prices and commodity currencies even further this week, given growing recession risks,” he added.
While government bond yields have moved off their previous highs, they are still hovering at levels not seen in more than 10 years (2011 for 10 years and 2007 for 2 years). More specifically, the 10-year Treasury yield hit a session high of 3.829% before settling at 3.695%, while the 2-year Treasury yield climbed as high as 4.27% before ending at 4.201%.
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As for the stock market, the Dow Jones Industrial Average closed down 1.6% at 29,590 – ending less than 1% above the 29,278.05 it must fall below to enter a new bear market. The S&P 500 Index ended down 1.7% at 3,693 and the Nasdaq Compound climbed 1.8% to 10,867. The S&P and Nasdaq ended at their lowest levels since June, while the Dow Jones hit a new year-to-date low.
Other news on the stock market today:
- Small cap Russell 2000 fell 2.5% to 1,679.
- U.S. Crude Futures climbed 5.7% to $78.74 a barrel, its lowest close since Jan. 10.
- Gold Futures Contracts fell 1.5% to end at $1,655.60 an ounce, its lowest settlement since April 2020.
- Bitcoin fell 2.6% to $18,823.30. (Bitcoin trades 24 hours a day; prices shown here are as of 4 p.m.)
- Wholesale Costco (COST) was knocked down 4.3% after earnings. In its fiscal fourth quarter, the wholesale retailer reported earnings of $4.20 per share on $72.1 billion in revenue, more than analysts expected. Same-store sales were up 13.7% year-over-year, in line with the consensus estimate. “COST sees signs of inflation relief as steel prices have come down and container shortages and port delays have improved,” said BofA Securities analyst Robert Ohmes (Buy). “In addition, the strengthening US dollar should help ease some of the import pricing pressures. However, recent price increases by CPG companies (still apparently supported by the environment rising salary) continue to persist. There are no specific examples of inflation easing in the Food and Sundries category of COST.”
- fedex (FDX) gave up 3.4% after the shipping giant announced a series of rate hikes for its express, ground and door-to-door delivery services, and said it was targeting cost savings for l fiscal year 2023 from $2.2 billion to $2.27 billion. This follows FedEx’s earnings warning last week, which sent stocks tumbling. “FDX is now (belatedly) parking cargo aircraft and reducing staff and facilities, which should improve operating margin from the dismal 5.3% in the August quarter (vs. 6, 8% year over year),” said CFRA Research (Hold) analyst Colin Scarola. “But with highly volatile macro conditions and new FDX management appearing to be slow to react, we recommend a neutral stance on equities despite a historically low valuation.”
Are these the best stocks to buy now?
Is it time to buy stocks? It’s a question that has divided Wall Street – and one that will only be answered in time. But regardless, “significant declines are a regular and recurring feature of the stock market,” says Brad McMillan, chief investment officer for Commonwealth Financial Network. “In that context, this one is no different. And since it’s no different, then like any other decline, we can reasonably expect markets to rebound at some point.”
And while a bear market gives investors plenty of reason to worry and creates short-term difficulties, it “also provides a chance to buy stocks on sale, which could lead to better future returns when it will straighten out,” adds McMillan. “And, as always, a bear market gives investors a chance to take a hard look at their portfolios and find out if they’re really comfortable with the risk they’re taking. The pain is real, but there are positive side effects.”
Many investors will choose to turn to cash amid this volatility. But for those looking to find bargains in the stock market, there are certainly plenty of names trading much lower than they were at the start of the year. But finding the best stocks to buy when the market is selling off can be daunting, so we turned to the pros to come up with a list of their top high-conviction picks – each expected to rise at least 20% over the next 12 about months. . Check them.