Wall Street capped a choppy week of trading with a broad slide for stocks Friday, giving the S&P 500 its second losing week in a row.
The benchmark index fell 1.2%, its first loss in three days. The Dow Jones Industrial Average dropped 0.8% and the Nasdaq composite gave back 1.6%.
A pedestrian strolls by the New York Stock Exchange Feb. 24, 2022, in New York.
U.S. automaker stocks proved to be resilient after members of the United Auto Workers union walked off the job at several plants overnight. Ford slipped 0.1% and General Motors rose 0.9%. Shares in Stellantis gained 1.9% in trading on the Milan Stock Exchange in Italy.
The market posted some gains earlier this week following several healthy indicators on the economy. Wall Street has been watching economic updates ahead of the Federal Reserve’s interest rate policy meeting next week. The central bank is expected to hold interest rates steady after spending much of the last two years pushing rates higher in its bid to tame inflation.
People are also reading…
“Things were fairly in line from a data perspective,” said Matthew Stucky, senior portfolio manager at Northwestern Mutual Wealth Management. “Really, the market is laser-focused on what’s going to impact Federal Reserve activity.”
The central bank raised rates aggressively through 2022 and 2023 in an effort to tame inflation, but it maintained interest rate levels at its last meeting. Inflation has generally been easing back to the central bank’s target of 2%.
Inflation at the consumer level edged higher than expected in August, but high gasoline prices were the biggest driver. Oil prices have been climbing over the summer after Saudi Arabia decided to maintain production cuts. That raised concerns about gasoline prices rising and stoking inflation.
Investors are overwhelmingly betting that the Fed will hold interest rates steady when it closes a two-day meeting Wednesday. They also expect the central bank could hold rates steady for the rest of the year. The Fed has said it remains willing to continue raising rates if it seems necessary to continue fighting inflation.
All the sectors in the S&P 500 ended in the red Friday, with technology stocks the biggest drag on the index. Retailers also weighed down the index.
All told, the S&P 500 lost 54.78 points to 4,450.32. It’s up just under 16% so far this year.
The Dow fell 288.87 points to 34,618.24. The Nasdaq, which is heavily weighted with technology stocks, slid 217.72 points to 13,708.33.
Bond yields gained ground. The yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, rose to 4.33% from 4.29% late Thursday. The yield on the 2-year Treasury held steady at 5.02%.
Rich young Americans have lost confidence in the stock market — and are betting on these 3 assets instead
Rich young Americans have lost confidence in the stock market — and are betting on these 3 assets instead
The stock market has long been the go-to choice for people looking to invest their money. But that could be about to change as a younger generation enters the scene.
According to a recent survey from Bank of America, individuals aged 21 to 42 with at least $3 million in assets only have 25% of their portfolio invested in stocks. For wealthy investors over age 43, the allocation to equities is much higher at 55%.
The recent market volatility may have something to do with these millennials’ decisions.
“We’ve had a very strong run in the stock market over the last decade and are now living through volatile times. That’s on the front of people’s minds,” says Jeff Busconi, chief operating officer at Bank of America Private Bank, in an interview.
Despite the stock market’s recent bounce, the benchmark S&P 500 Index is still down around 9% over the last year.
Busconi adds that the younger generation of investors increasingly believes that “a traditional portfolio of stock and bonds is not going to deliver above-average returns over time.”
Moneywise reviewed news reports, industry surveys, and other material to identify the assets rich millennials favor.
Real estate
Real estate has been a popular asset class as of late — perhaps because it’s a well-known hedge against inflation.
As the price of raw materials and labor goes up, new properties are more expensive to build. And that drives up the price of existing real estate.
Well-chosen properties can provide more than just price appreciation. Investors also get to earn a steady stream of rental income.
It’s no surprise that high-net-worth individuals — regardless of their age — see opportunity in this asset.
In the Bank of America survey, 28% of younger people said real estate presents great growth potential; 31% of the older group held the same opinion.
But you don’t need to be a landlord to start investing in real estate. There are plenty of real estate investment trusts (REITs) as well as crowdfunding platforms that can get you started on becoming a real estate mogul.
Cryptocurrency
Once considered a niche asset, cryptocurrency has now entered the mainstream. A study from the CFA Institute earlier this year showed that 94% of state and government pension plans have invested in cryptocurrencies.
Of course, many investors learned about cryptocurrencies’ volatility the hard way through this year’s massive pullback. But some wealthy millennials still believe in the asset class.
In the Bank of America survey, 29% of younger people said crypto offers great opportunities for growth, while only 7% of the older group agreed.
Unsurprisingly, younger folks also have a lot more exposure to crypto (average allocation of 15% of their portfolio) than the older generation (average allocation of 2% of their portfolio).
It’s easy to get in on the action — there are plenty of platforms that allow you to invest in crypto. Just be aware of fees: many exchanges charge up to 4% in commission fees just to buy and sell crypto. But some investing apps charge 0%.
Private equity
Private equity refers to investments in companies that are not publicly traded on a stock exchange.
A private equity fund takes money from the fund’s investors, invests the money into the companies — usually by taking controlling stakes — and works with the companies’ management teams to make their businesses more valuable. The goal is to sell their portfolio companies later — hopefully for a decent profit.
While private equity funds are generally not open to small investors, they’ve been gaining popularity among the wealthy.
In 2021, private equity buyouts doubled from 2020 to $1.1 trillion, according to Bain & Company.
This investment class has also received the attention of high-net-worth millennials.
The Bank of America survey suggested that 25% of individuals aged 21 to 42 with at least $3 million in assets identified private equity as one of the greatest growth opportunities, compared to 15% for those who are older.
This story originally appeared on Moneywise and has been independently reviewed to meet journalistic standards.
Recent Comments