Mar 12, 2020 - Economy & Business

Retail maintains its iron stomach

Illustration: Aïda Amer / Axios

The stock market is down significantly, but insofar as that market-reporting cliché the "wave of selling" is anywhere to be seen, it isn't coming from mom-and-pop investors.

By the numbers: As stocks plunged on Monday, more than twice as many Fidelity customers were buyers than sellers.

  • “Customers are using the market volatility to add equities to their portfolio,” Fidelity’s Robert Beauregard told Yahoo Finance

At Vanguard, customers were even more sanguine, with less than 0.3% of retirement accounts making any trades at all in the past month.

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Data: FactSet; Chart: Axios Visuals

One reason people rotate into stocks is when they pay out much more in dividends than a Treasury note does in interest payments.

  • That's not normally the case. The dividend yield on the S&P 500 is generally lower than the yield on the 10-year Treasury note because investors expect to make money not only from stock dividends but also from price appreciation.

Earlier this week, however, the dividend yield on the S&P 500, at 2.09%, was more than 4 times the yield on the 10-year Treasury note. That easily marked an all-time high for the ratio.

  • Be smart: There are limits to how informative this ratio can be. If 10-year bond yields head negative, for instance, as they have done in Germany and many other countries around the world, the ratio would first spike up to ∞ and would then go negative itself.

Why it matters: This ratio doesn't help you time the market — stocks can always fall further. But it's easy to see how investors in Treasury bonds might start worrying that their money is no longer working hard for them.

Go deeper: Don't panic about the stock market

Go deeper

Wall Street's coronavirus anxiety hits new heights

A board displaying the foreign exchange rate of the US dollar against the Japanese yen, next to the Tokyo Stock Exchange in Tokyo. Photo: Kazuhiro Nogi/AFP via Getty Images

Trading activity Sunday night shows the recent tumult on Wall Street will continue.

What's going on: The yield on the benchmark government bond continued its swift slide lower as nervous investors pile into the safe-haven asset, while pre-market trading pointed to steep declines for U.S. stocks. Oil prices dropped sharply.

There Is No Alternative to Treasuries

Data: FactSet; Chart: Axios Visuals

The acronym TINA (There Is No Alternative) had long been used to explain why investors piled into U.S. equities, but it may now apply to U.S. Treasuries.

State of play: After Monday's sell-off, the S&P 500 has erased all of its gains dating back a year, and the dollar, emerging market equities and oil are all negative during that period.

Stocks surge 4% after Wall Street's worst day since 2008

Photo: Timothy Clary/AFP via Getty Images

The stock market closed up more than 4% on Tuesday, recovering half of the losses from Monday's sell-off.

Between the lines: The Trump administration signaled it will work with Congress to try to shore up the economy amid concerns about the effects of the spreading coronavirus and collapsing oil prices.

Go deeperArrowUpdated Mar 10, 2020 - Economy & Business