This sell-off isn’t the start of a bear market, analysts say

Markets over the last few days have plunged, with U.S. stocks posting their worst two-day stretch in eight months. The three major indexes ‘ the Dow, the S&P 500 and the Nasdaq Composite ‘ all fell more than 5 percent between Wednesday and Thursday. Asia markets followed suit on Thursday, with mainland China markets tumbling more than 5 percent, and Japan’s Nikkei index falling almost 4 percent.

Despite those moves, financial services firm Barings said in a note that there’s no cause for panic yet.

  • Publisher: CNBC
  • Date: 2018-10-12T03:10:16-0400
  • Author: Author link
  • Twitter: @CNBC
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This sell-off isn’t the start of a bear market, analysts say

The sell-off this week isn’t the start of a major or prolonged bear market, but rather, simply a correction, experts said on Friday.

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“The sharp sell-off we are seeing in the market has left a lot of folks wondering if this is the beginning of the end. Investors shouldn’t panic,” said Christopher Smart, head of macroeconomic and geopolitical research at Barings.

“So far, it has the feel of a temporary correction that will take some of the excess air out of tech stocks,” he said. This year, shares of technology companies have outperformed other sectors, but were hit hard by the losing streak on Wall Street on Thursday.

Yes, Junk Bonds Are Pricey. But a Bear Market Isn’t Near

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The high-yield bond market is having a good year’too good, perhaps, in the view of some analysts and investors.

Junk bonds, or debt issued by below-investment-grade companies, returned 2.5% this year, through the end of September, compared with a loss of 2.2% for investment-grade paper. But those gains reflect a sharp decline in the extra yield meant to compensate investors for the additional risk that they won’t be repaid in full. Indeed, the junk-bond market’s credit spread, or yield premium over Treasuries, recently narrowed, reaching its lowest level since before the 2008-09 financial crisis.

  • Date: 2018-10-05T22:42:00.000Z
  • Author: Alexandra Scaggs
  • Twitter: @BarronsOnline
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