Nasdaq Falls Into Bear Market After Volatile Day

U.S. stocks and the British pound turned lower Tuesday following Bank of England Gov. Andrew Bailey’s remark that the U.K. central bank’s plan to rescue pension funds hit by interest-rate increases will end as scheduled Friday.

Major U.S. stock indexes were mixed following the remarks, made at the Institute for International Finance’s annual meeting in Washington D.C., reversing a rally of about 0.8% in the S&P 500. The Dow was modestly higher and the Nasdaq Composite was down 1.1%, returning the tech-heavy index to a “bear market,” or a decline of 20% or more from a recent peak.

The comments were taken as negative on Wall Street because they raise the prospect of further asset sales by U.K. pension funds in the face of large interest-rate increases.

The program of bond buys launched Sept. 28 had been intended to give the funds a “window of opportunity” to sell assets in an orderly fashion, but Mr. Bailey said that opportunity would end on Oct. 14.

Stocks had opened lower, then turned higher at midday. They reversed course in the final hour of trading after Mr. Bailey’s comments.

“You’ve got three days left,” Mr. Bailey said in remarks addressed to pension funds. “You’ve got to get this done.”

The Dow’s performance was aided by big gains in Amgen Inc. The biotech stock jumped 6%, making it the best performer in the Dow on Tuesday. Shares of biotech companies helped power the other indexes higher, too, with the Nasdaq Biotechnology Index rising more than 2% in recent trading.

Investors have been grappling throughout the year with the effects of decades-high inflation and the Federal Reserve’s attempts to tame it with higher interest rates. For many, the concerns have grown deeper in recent weeks as inflation remains stubbornly high and traders worry that the Fed will cool the economy so much that it tips into a recession.

“The question now is not if there will be a recession, it’s when and how bad,” said Justin Wiggs, managing director in equity trading at Stifel Nicolaus. One week ago, traders were cheering the biggest two-day rally in the Dow and S&P 500 in two years, but stocks have fallen steadily since then. Both the Dow and the S&P 500 remain in bear markets.

U.S. inflation data due Thursday will show whether the Fed’s sizeable interest-rate rises are working to tame soaring consumer prices. A larger-than-forecast rise could bolster expectations that Fed officials will opt for another supersize 0.75 percentage point increase at their next meeting.

Meanwhile, investors are bracing for the first wave of major corporate earnings reports due this week, which are expected to show companies struggling with high rates and weakening consumer demand. PepsiCo reports Wednesday while financial titans such as BlackRock, JPMorgan Chase and Morgan Stanley report later in the week.

“First-quarter and second-quarter earnings came in remarkably well. The third quarter may be the pivot point at which we see earnings cannot keep growing to the sky, and that companies are subject to the economic headwinds we are facing from all kinds of directions,” said David Donabedian, chief investment officer at CIBC Private Wealth US.

And what’s even more important than third-quarter results, some investors say, is the guidance corporate leaders give about next year.

Some traders said Tuesday’s midday bounce higher was not so much a sign of strength, but rather a sign of so-called short covering. Some traders make money by betting that stocks are headed lower. To do so, they borrow shares and sell them, hoping to profit by buying these shares back at a lower price at a later date. When stocks start to climb, those gains can be accelerated by short sellers covering their bets by buying shares.

Yields on benchmark U.S. government bonds continued their ascent, coming within sight of the 4% level. The yield on the benchmark 10-year Treasury note rose to 3.938%, its second highest level of the year, from 3.883% on Friday. The U.S. bond market was closed Monday for the Columbus Day holiday.

In commodity markets, oil weakened as concerns about the economy returned to the fore. Prices rose last week after the Organization of the Petroleum Exporting Countries and its Russia-led allies agreed to slash their output. On Tuesday, Brent crude, the international oil benchmark, shed 2% to $94.29 a barrel.

Overseas indexes slumped. In Japan, the Nikkei 225 fell 2.6%. Hong Kong’s Hang Seng closed 2.2% lower, hitting its lowest level in more than a decade.

In Europe, the pan-continental Stoxx Europe 600 fell 0.6%, led by losses among its oil-and-gas and chemicals companies.

In our 20s, my new husband and I took a year off from our fledgling careers to travel in Southeast Asia. Equipped with paper maps, we began in China and improvised each day’s “itinerary” on the go. A gap year for grown-ups, I called it, although I scarcely qualified as one.

Nearly 40 years later, we are new retirees with the same wanderlust. We wondered: Could we recapture the thrill of winging it, enduring rough roads and cheap hotels?

We could and did, but for 2½ months instead of 12. We mapped out a route that would take us up Africa’s east coast and then—who knows where? Here’s how we rolled and five important lessons we learned on a 6,000-mile trip.

Kenya: Live large by day

Our first stop was the tiny, car-free island of Lamu, well-known for its high-profile visitors, from Kate Moss to the Obamas. This low-key getaway offered white-sand beaches, dhows — boats you can rent for day cruises and snorkelling — and lots of donkeys, the main mode of transport.

We considered the beachside Peponi Hotel in Shela, a hot spot since the 1960s (Mick Jagger bunked there). But room rates start at $250, far above our per-night budget of $70 or less. When contemplating almost 100 nights of travel, price matters.

So we chose a villa in the dunes called Amani Lamu, $61 per night for an en suite room with a private terrace and shared plunge pool.

We still had a cool Peponi moment come sunset: On the hotel’s whitewashed veranda, we sipped Pepotinis and plotted our next day’s interlude at the Majlis, Lamu’s fanciest resort (from $580).
With a $20 day pass, we could lounge around its pools and beach bars like proper resort habitués.

Lesson learned: Live like billionaires by day and frugal backpackers by night.
Must-go: Across the bay on Manda Island, bunk a night in a thatched-roof bungalow on stilts at Nyla’s Guest House and Kitchen (from $48 with breakfast).
After a dinner of doro wat, a spicy Ethiopian chicken stew and rice, the sound of waves will lull you asleep.

Egypt: Ask. Politely.

From Lamu, we flew to Aswan in Egypt. Our “plan”: Cruise down the Nile to Luxor, then take a train to Cairo, and venture to Giza’s pyramids.

Turns out it’s the kind of thing one really should book in advance. But at our Aswan hostel, the proprietor, who treated us like guests deserving white-glove service, secured a felucca, a vessel manned by a navigator and captain-cum-cook. Since we’d booked fewer than 24 hours in advance and there were no other takers, we were its sole passengers for the three-day trip.

One day, we stopped to tour ancient temples and visit a bustling camel fair, but otherwise, we remained on board watching the sunbaked desert slide by. We slept on futons on the deck under the stars. The cost: about $100 per night per person, including three meals.

Lesson learned: Ask for help. We found Egyptians kind and unfazed by our haplessness, especially when we greeted them respectfully with assalamu alaikum (“Peace to you”).
Must-go: For buys from carpets to kebabs, don’t miss Cairo’s massive Khan el-Khalili bazaar, in business since 1382. We loved the babouche, cute leather slippers, but resisted as our packs were full.

Turkey: Heed weather reports

Next stop Tunisia, via a cheap flight on EgyptAir. We loved Tunisia, but left after six days because the weather got chilly.

Fair enough, it was January. We hopped continents by plane and landed in Istanbul, where it snowed. Fortunately, two of Istanbul’s main pleasures involve hot water. We indulged in daily hammams, or Turkish baths, ranging from $30 to $60 for services that included, variously, a massage, a scrub-down and a soak.

Beneath soaring ceilings at the temple-like Kılıç Ali Paşa Halamı, brisk workers sternly wielded linen sacks to dowse my body in a cloud of hot foam.
In between visits to Ottoman-era mosques and the city’s spice markets, we staved off the chill by drinking fruity pomegranate tea and sampling Turkish delight and baklava at tea salons.

A favourite salon: Sekerci Cafer Erol in Kadıköy, a ferry-ride away on the “Asian” side of Istanbul, where the city adjoins Asia.

Lesson learned: Pay attention to the weather gods. We foolishly took the concept of travelling off-season too far.
Must-go: Don’t miss the Istanbul Modern, the Renzo Piano-designed art museum in the historic Beyoğlu district.

Cambodia: Chill out

After a long flight from Istanbul, we spent two weeks in Laos and then hopped another plane to Cambodia, specifically Koh Rong Sanloem, another car-free island.

Like vagabonds, we lolled by the warm, super-blue water of Sunset Beach, steps from our bungalow at Sleeping Trees (from $54 per night).
A caveat: You have to sweat to get to this island paradise. We took a bus, a ferry and then hiked for 40 minutes up and down a steep hill and through a jungle. You’ll find only a handful of “resorts”—simple bungalow complexes like ours. There’s nothing much to do. I’ll be back.

Lesson learned: Until our week in Cambodia, we’d been travelling too much and too fast, prioritising exploration over relaxation. This island taught us the pleasures of stasis.
Must-go: Spend one day in Cambodia’s capital city, Phnom Penh, to delve into its sobering history. Tour the Choeung Ek Genocidal Centre, site of a Killing Field, where nearly 9,000 Cambodians died.

Thailand: Be a frugal hedonist

We spent our last two weeks on the island of Ko Samui, where season three of “The White Lotus” was shot.

We went there for its astounding beauty, not the luxury resort experience that comes with too many boisterous lads on vacation, snake farms and traffic jams in town.

Truth be told, we flouted our budget rules to book an Airbnb with a pool (from $300) in the hills of Lipa Noi on the island’s quiet side. We joined the nearby Gravity Movement Gym to work out, but cooked our own meals to keep our final tabulation of expenses within reach.

Lesson learned: Pinching pennies feels restrictive, no matter how lush the surroundings. And it leads to bickering, as partners tally up who squandered how much on what.
With the end in sight, we splurged on the villa and even bought souvenirs, knowing we’d lug them for days, not weeks.
Must-go: Take the 30-minute ferry to sister island Ko Pha Ngan for its peace, love and yoga vibe and, once a month, full-moon parties.
Via Airbnb, we bunked at a Thai house called Baan Nuit, run by the Dear Phangan restaurant proprietors.

We sampled steamed dumplings, white fish in a Thai basil sauce and spicy noodles for a mere $15 apiece.
Hey, indulge in that “White Lotus” moment if you dare!