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S&P 500 limps to slightly lower close as quarter-end looms

Economy Jun 29, 2022 08:20PM ET
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© Reuters. A screen displays trading informations for stocks on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 27, 2022. REUTERS/Brendan McDermid

By Stephen Culp

NEW YORK (Reuters) - The S&P 500 ended a seesaw session slightly down on Wednesday as investors staggered toward the finish line of a downbeat month, a dismal quarter, and the worst first-half for Wall Street's benchmark index since President Richard Nixon's first term.

The three major U.S. stock indexes spent much of the session wavering between red and green. The Nasdaq joined the S&P 500, closing nominally lower, while the blue-chip Dow posted a modest gain.

"The market’s struggling to find direction," said Megan Horneman, chief investment officer at Verdence Capital Advisors in Hunt Valley, Maryland. "We had disappointing data, and the markets are waiting for earnings season, when we'll get more clarity" with respect to future earnings and an economic slowdown.

Market leaders Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN) provided the upside muscle, while economically sensitive chips small caps and transports were underperforming the broader market.

With the end of the month and the second quarter a day away, the S&P 500 has set a course for its biggest first-half percentage drop since 1970.

The Nasdaq was on its way to its worst-ever first-half performance, while the Dow appeared on track for its biggest January-June percentage drop since the financial crisis.

All three indexes were bound to post their second straight quarterly declines. That last time that happened was in 2015.

"We have a central bank that has had to pivot from a decades-old easy money policy to a tightening cycle," Horneman added. "This is new for a lot of investors."

"We’re seeing a repricing for what we expect to be a very different interest rate environment going forward."

The Dow Jones Industrial Average rose 82.32 points, or 0.27%, to 31,029.31, the S&P 500 lost 2.72 points, or 0.07%, to 3,818.83 and the Nasdaq Composite dropped 3.65 points, or 0.03%, to 11,177.89.

Of the 11 major sectors of the S&P 500, five lost ground on the day, with energy stocks suffering the largest percentage drop. Healthcare led the gainers.

Benchmark Treasury yields have risen by over 1.606 percentage points so far in 2022, their biggest first-half jump since 1984. That explains why interest rate sensitive growth stocks have plunged over 26% year-to-date.

Federal Reserve officials in recent days have reiterated their determination to rein in inflation, setting expectations for their second consecutive 75 basis point interest rate hike in July, while expressing confidence that monetary tightening will not tip the economy into recession.

In economic news, U.S. Commerce Department data showed GDP contracted slightly more than previously stated in the first three months of the year. Consumer spending, which accounts for about 70% of the economy, contributed substantially less than originally reported.

A day earlier, a dire consumer confidence report showed consumer expectations sinking to their lowest level since March 2013.

Second-quarter reporting season remains several weeks away, and 130 of the companies in the S&P 500 have pre-announced. Of those, 45 have been positive and 77 have been negative, resulting in a negative/positive ratio of 1.7 stronger than the first quarter but weaker than a year ago, according to Refinitiv data.

What will investors be listening for in those earnings calls?

"Margin pressures, that’s the big concern, pricing pressures, scaling back plans for capex because of the slowdown, and if they see any improvement in the supply chain," Horneman said.

Packaged food company General Mills Inc (NYSE:GIS) jumped 6.3% after its sales beat estimates.

Bed Bath & Beyond Inc (NASDAQ:BBBY) tumbled 23.6% following the retailer's announcement that it had replaced chief executive officer Mark Tritton, hoping to reverse a slump.

Package deliverer Fedex Corp dropped 2.6% in the wake of its disappointing margin forecast for its ground unit.

Declining issues outnumbered advancing ones on the NYSE by a 1.96-to-1 ratio; on Nasdaq, a 1.79-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week highs and 36 new lows; the Nasdaq Composite recorded 14 new highs and 284 new lows.

Volume on U.S. exchanges was 11.55 billion shares, compared with the 12.79 billion average over the last 20 trading days.

S&P 500 limps to slightly lower close as quarter-end looms
 

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Comments (32)
Kerry Ditto
Kerry Ditto Jun 29, 2022 4:48PM ET
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It is believable that the second half of this year should have strong stock market regardless what Fed does or does not. due to power of bitcoin and other money equivalants, the traditional power of Fed is rapidly dimishing.
Kerry Ditto
Kerry Ditto Jun 29, 2022 4:41PM ET
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mid-year effects of stock market returns tomorrow and on Friday should be great. In particular, Friday would be the best among trading days around mid-year
Kerry Ditto
Kerry Ditto Jun 29, 2022 2:45PM ET
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oil prices are seriously falling right now. should be good news
Kerry Ditto
Kerry Ditto Jun 29, 2022 2:00PM ET
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magic rally toward close today is highly likely, patterns show
Jason Patcher
Jason Patcher Jun 29, 2022 1:50PM ET
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the 80s we're incredible, we went from Atari to commodore, Nokia's to blackberry, pagers came and went. this economy is nothing compared to those days... good luck.
Nelgybtc Dnyjec
Nelgybtc Dnyjec Jun 29, 2022 1:50PM ET
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We're going from ford to tesla, facebook to tiktok, golds gym to peloton, democracy to fascism.
Kerry Ditto
Kerry Ditto Jun 29, 2022 1:47PM ET
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US and Saudi may have some kind of oil deal, the falling oil prices today might indicate, stock market hopes
Kerry Ditto
Kerry Ditto Jun 29, 2022 1:42PM ET
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oil prices falling today must be good news for stocks.
Mitchel Pioneer
Mitchel Pioneer Jun 29, 2022 1:31PM ET
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The US Ponzi Scheme magically reverses every time it goes negative.  Can't give up their criminally manufactured, 800+ point "rally."  Can't have the S&P drop below 3800.  Soap opera drama in the biggest investment JOKE in the world.
Pa Sak
Pa Sak Jun 29, 2022 11:47AM ET
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Lionel Laurent
Lionel Laurent Jun 29, 2022 11:33AM ET
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Powel biden escroc
 
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