Investors were greeted rudely Wednesday morning by a painful 400-point drop in the Dow Jones Industrial Average. And another 500-point drop on Thursday.

Wednesday wasn’t the first sign of market jitters, as the S&P 500 was already riding a five-day losing streak. The selling pressure started on October 3, coinciding with the release of a powerful labor market report showing that 230,000 jobs were created last month.

Unemployment has plunged to the lowest levels in nearly 50 years. And for the first time since 1970, there are currently more job postings (6.7 million) than jobseekers (6.3 million).

#-ad_banner-#On the surface, that’s great news. However, the resurgent labor market and accompanying wage inflation have given the U.S. Federal Reserve ample ammunition to step up interest-rate hikes. Traders have responded by sending 10-year Treasury yields soaring to 3.23% — the highest level since May 2011.

Since the current rate tightening cycle began in 2015, 1-month Treasury yields have climbed from 0.02% to 2.16%. But longer-term rates (which are determined by inflation expectations and other market forces) have been slow to respond, flattening the yield curve.

But suddenly 10-year Treasury rates are spiking higher, giving the market a bad case of indigestion. The 10-year yield is a closely-watched benchmark that influences all kinds of corporate and consumer borrowing costs, from auto loans to mortgages to credit card interest rates.

Higher rates can dampen consumer spending and bite into corporate profits. Given that this record bull market has been fueled in large part by accommodative monetary policy and dirt-cheap capital, there is a fear that rising rates could end the party.

Considering borrowing costs are still historically low, economic activity is robust, and corporate earnings have been growing at a healthy 20%+ pace in recent quarters, I think the downside is limited. However, a 10% correction is certainly possible – and these selloffs have a way of feeding on themselves.

No Reason To Panic
But before you think about pulling your money out of the market and parking it at the bank, consider this…

About the only way you can describe the current payouts offered by banks is “paltry”. I suppose “stingy” might also work. The U.S. Federal Reserve may have raised benchmark short-term rates three times this year, six times over the past 24 months, and eight times since the current rate-tightening cycle began in 2015… But you wouldn’t know it by looking at the average savings account rate, which currently stands at a measly 0.09%.

That will net you a grand total of $90 in yearly interest for every $100,000 deposited. Money market accounts aren’t much better at 0.20%. A 1-year CD will get you 0.72%. And if you’re willing to tie up your principal for five years, then you can get a whopping 1.29%.

These are national averages compiled by Bankrate.com. Some institutions might offer a bit more. Still, even then, risk-free rates above 2% are hard to come by. And that’s after eight successive interest rate hikes.

Of course, cheap borrowing costs have helped fuel earnings growth for many businesses. They have also juiced returns for leveraged closed-end funds. Still, for most retirees trying to draw a decent income from their hard-earned nest egg, the end of the “accommodative” monetary policy era can’t come soon enough.

With GDP expanding and the labor market kicking into high gear, I think we’ll see rates continue to climb back toward historical norms. But it’s a slow, gradual process. In the meantime, as always, my time is spent in pursuit of unique securities that can make a difference today.

That being said, I’ll be looking to harvest some profits soon, recycling the proceeds into new candidates that have more upside. That’s why I recently sent a special alert to High-Yield Investing subscribers, telling them that I am placing stop-loss orders of seven of our current holdings.

Why We’re Sticking With High-Yield Stocks
The truth is that there aren’t too many payouts in the S&P 500 above 4% — let alone 6.8%. You won’t get an income stream like that investing in popular blue chips such as McDonald’s (NYSE: MCD). And forget about banks and bonds. It normally means taking a chance on underappreciated companies that are temporarily out of favor.

You might call them “fixer-uppers” that just need a few minor repairs and a fresh coat of paint. So we sometimes have to be patient with turnaround candidates that are working to get back on track. The occasional pullback is to be expected.

The good news: At last check, our portfolio carried an average yield of 6.8%. Barring any changes, we can expect these holdings to generate about $7,200 in dividends and interest over the next 12 months. In case you’re curious, the portfolio yield stood at 6.2% in October 2017. And it was earning 5.7% in October 2016. And as you know, rising share prices drive yields downward. But even with many holdings appreciating nicely, the portfolio yield has still increased by 110 basis points.

The bottom line is this… You don’t have to settle for the paltry yields offered by CDs, bonds, or most U.S. stocks. But extraordinary yields aren’t found in ordinary places.

That’s why my High-Yield Investing staff and I are here to help. If you’d like to learn more about the service, and get access to all of my research, simply go here.