If you haven't had a second to look at the news, it won't take you long to find the number one headline – “We're in the middle of one of the worst market corrections since the financial crisis.” Last week the S&P 500 took a sudden drop (losing about 11%) The 10-year U.S. Treasury reached its lowest level in history.
This is as bad as it gets, right? Well, maybe. See, the fear over the spreading Coronavirus is the catalyst for this market instability. What would it take to make it better? Essentially, a vaccine or proven plan to contain the fast-spreading illness. How can this get worse? Basically, the virus spreads. Imagine if we begin to hear of outbreaks in Los Angeles, New York City, Chicago, or here at home in DFW. That would lead consumers to ask, “Should I go to the movie theater tonight? Should I go out to eat tomorrow? Should we cancel our anniversary trip to Italy?” Fear means less consumer spending, thus a slower economy, thus higher risk of recession.
Are we in or near a recession yet? No, and it will take considerably worse markets for that to be the case. Keep in mind the stock market, on average, experiences a 10% drop once a year. Our recommendation is to treat this recent pullback as a buying opportunity within your investment accounts and to consider a mortgage refinance.