This spring the major stock market activity has been on a big downturn, with the Nasdaq Composite entering bear territory.
Why is the market down, which stocks have been hit the worst, what can we expect moving into the summer, and what alternatives and strategies are the experts recommending???
Learn all this and more in today’s article.
As reported in Yahoo Finance:
A combination of concerns on the geopolitical, COVID-19, and inflationary fronts have weighed heavily on risk assets in recent weeks, triggering volatility across stocks, cryptocurrencies and commodities. The CBOE Volatility Index, or VIX, jumped above 34, or well above its longer-run average of around 20.
On Monday the S&P 500 dropped more than 3% and ended at its lowest level since March 2021, closing below 4,000. The Nasdaq Composite plunged by 4.3% as technology stocks came under renewed pressure. And the Dow shed more than 650 points, or 2%, to settle at 32,245.70.
Losses & Volatility
Analysis and forecast from Forbes:
Frustrated investors got no relief in April as U.S. stock markets fell deeper into the red. The Nasdaq Composite tumbled 13.3% in April, the index’s worst monthly performance since 2008, while the S&P 500 fell 8.8% and ended the month at levels last seen in May 2021.
The sell-off has wrought carnage for some of the largest names in the stock market. The Nasdaq 100, an index of the largest non-financial companies, is in a bear market, down more than 23% from its last all-time high in November 2021.
The current earnings season has been particularly bad for tech companies, though other factors are also at play in the third-worst start to the year in the S&P 500’s history.
Rampant inflation is pushing the Federal Reserve to be more aggressive in raising interest rates. At the same time, market participants are nervous about global economic growth, thanks to high oil prices, the war in Ukraine, and a spike in Chinese Covid-19 cases.
As markets eye bigger Fed rate hikes and other sources of uncertainty, continued volatility is likely in May, says Sandy Villere, a portfolio manager at Villere & Co.
“Looking forward, the path of the market will depend on the Fed’s battle against inflation,” David Kostin, Goldman Sachs chief U.S. equity strategist, wrote in a note. “In our base case, the negative impact on valuations from higher real rates will be partially offset by a narrowing yield gap. If recession risk rises, interest rates may fall but not by enough to prevent equity multiple sand share prices from falling further.”
Investors this week are awaiting more data on the state of inflation in the U.S., which will help show how much more aggressive the Fed may need to be to rein in elevated price pressures. Wednesday’s Consumer Price Index (CPI) and Thursday’s Producer Price Index (PPI) for April are expected to show a deceleration in price increases, suggesting March may have been the peak in the rate of price increases across the economy.
Considering the change in the investment landscape, here are the stocks you should be paying attention to: green, travel, health care, e-commerce, and undervalued stocks.
Also, bonds have been showing steady returns, and as always real estate in supply-constrained markets is a shoo-in.
Bond Market Could Attract Stock Investors
Investors weary from the stock market volatility are looking at the bond market. The first quarter of the year saw record amounts of money flowing into some bond exchange-traded funds (ETFs). What’s more, the yield on the benchmark 10-year Treasury note rose above 2.9% in April for the first time since 2019, gaining more than 25% in April.
Also, I bonds, a type of U.S. savings bond designed to protect the value of your cash from inflation, are set to deliver an estimated 9.62% annualized return starting in May.
Property as a hedge against rising interest rates
An increase in property value, increased rents, and de-evaluation of debts can help the investor combat inflation, as well as an unstable market.
Supply-constrained growth markets:
Palm Beach County recorded the highest population growth in total and 41.5% of immigrants to SE Florida from the NYC area. The NY folks earn 29% more on average than 2019 Palm Beach residents. Based on the raw number of new people and the average net income flow, Palm Beach gained ~$3.4 billion in new income in 2020 — far exceeding the gains of any other county in the US yet examined.
This upward trend in income growth combined with population growth indicates an opportunity for real estate investment and development catering to travelers, snowbirds, and new migrants to the area.
The current market activity demands a reevaluation of current holdings, along with a fluid and responsive game plan to manage the trends and dips – to prevent, or at the least minimize, losses.
A diversified portfolio consisting of a range of assets and stocks is what we recommend at BAI Capital.
As we have mentioned before, property can act as a hedge against the market and can also outpace inflation.
Contact us for more information on valuable upswing Florida properties that you can invest in today.