And just like that, after months of growth, fears of a new delta variant, talks of the Fed unwinding its support for the economy, and an unexpected spike in long-term bond yields sent U.S. equities tumbling to record their most significant monthly sell-off since March 2020.
Watching the Dow plummet by 500 points posting its worst month of 2021 was certainly not the way anyone wanted to enter into the last quarter of this year.
Every sector in the S&P 500 fell last week, which led to over 90% of the stocks in the index closing the week in the red.
The circumstances we face this time are much different from those we have faced in the past.
Economic growth slowing down, supply-chain bottlenecks, regulatory risks emerging from China, and a global energy crunch are all additional factors that we are dealing with right now on top of a political tug of war going on in Washington.
Of course, the Labor Department reporting last Thursday that unemployment applications rose for the third straight week and were much higher than economists had anticipated does not sound too reassuring for anyone invested in this market right now.
Companies such as Nike and Sherwin-Williams were just a few companies that publicized their concerns to their investors about supply chain problems, higher raw material costs, and labor issues.
And who could forget about the 5.3% inflation levels we are fighting?
Reminder: this is an inflation rate higher than what the Fed considers to be healthy.
While it’s all fear and anxiety in the stock market, other markets seem as if they are setting up for massive gains to come in the near future.
Last Thursday, gold prices jumped over 2% while the dollar slid upon the bad economic news.
Robin Bhar, an independent consultant, seems to have hit it on the head, stating on CNBC:
Gold is “also running into some renewed physical buying, with some investors looking to hedge against the economic uncertainty, rising inflation.”
As the adage goes, history repeats itself, and that’s exactly what is happening now as gold has historically acted as a safe haven for wealth in times of economic turmoil and uncertainty.
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