If you are looking for signs of distress among worried investors, you don't have to look far.
Stocks continued their tumultuous streak on Wednesday with some of the most harrowing declines of the past month – but already some strategists are contemplating buying opportunities.
The S&P 500 fell 15.21 points or 0.8 per cent, to 1862.49. Earlier in the day, it had been down more than 55 points, putting it on track for its worst sell-off in three years and taking the benchmark index close to correction territory. The Dow closed down 173.5 points, or 1.06 per cent, at 16,141.74 - after earlier falling as far as 460 points.
Canada's S&P/TSX composite index fell 166.8 points or 1.2 per cent, to 13,869.88, adding to a miserable stretch: It has fallen more than 11 per cent since early September.
But the dramatic shift in investor sentiment – a mere month after major indexes were touching record highs amid comforting global economic news – can be seen from plenty of other angles besides the startling declines among major stock market indexes.
Bond yields are plunging, gold is stirring and investors are making few distinctions among companies in their haste to exit the market. Emerging markets are being thrashed and key commodities such as crude oil are in free fall.
"If you take the entire constellation of market movements, you would tend to see this as what happens when people get scared," said David Wolf, a portfolio manager at Fidelity Investments Canada.
The number of stocks caught in the downturn of the past month has been breathtaking.
Within the S&P 500, 90 per cent of stocks have fallen since the index hit a record high in mid-September, suggesting that investors are taking a sell-first, think-later approach to the downturn.
In Canada, where the benchmark index is largely focused on financials and commodity producers, the casualty rate is the same.
"It looks like panic selling," said Stephen Takacsy, chief investment officer at Montreal-based Lester Asset Management.
As investors eschew stocks, they're rushing into typical havens to wait out the storm.
Gold has seen some interest recently, rising more than 4 per cent over the past two weeks – although it is well off its highs several years ago.
But U.S. Treasury bonds are showing the most interest among worried investors, causing yields to plunge as prices soar.
The yield on the 10-year U.S. Treasury bond briefly dipped below the 2 per cent threshold on Wednesday morning, its lowest yield in more than a year and down sharply from above 2.6 per cent in mid-September.
Earlier in the year, bonds had been reflecting an upbeat view of the U.S. economy and anticipating a shift in monetary policy from the Federal Reserve as it wound down its bond-buying program and contemplated its first interest rate hike.
Now, the focus has shifted to deteriorating economic conditions in Europe, Japan and China – along with the worries that the U.S. economy won't be able to recover on its own.
"From our lens, the stock market is currently pricing in 3 per cent U.S. real GDP growth," said David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates, in a note.
"The bond market, meanwhile, is discounting a recession-like backdrop of 1 per cent growth. Both cannot be right."
Meanwhile, the CBOE Volatility index – or VIX, the so-called fear-gauge – is also pointing to a dire future. The index, which tends to rise as investors grow nervous, has shot up by more than 70 per cent in October to its highest level in nearly three years.
Still, Mr. Rosenberg thinks the selloff is likely a reaction to a frothy, overvalued market, and it is probably mostly over.
Mr. Takacsy, who had been taking a defensive position toward stocks this summer, agreed, adding that his firm has been buying stocks as prices fell.
"You never know where the bottom is; you'll never catch the bottom," he said. "But you can buy progressively in a bad period like this, and over the long-run you'll do extremely well."