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S&P 500 closes the book on its biggest first-half plunge since 1970

Economy Jun 30, 2022 10:42PM ET
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© Reuters. A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 22, 2022. REUTERS/Brendan McDermid

By Stephen Culp

NEW YORK (Reuters) - Wall Street ended the session lower on Thursday, crossing the finish line of a grim month and quarter, a dismal coda to the S&P 500's worst first half in more than half a century.

All three major U.S. stock indexes finished the month and the second quarter in negative territory, with the S&P 500 notching its steepest first-half percentage drop since 1970.

The Nasdaq had its largest-ever January-June percentage drop, while the Dow suffered its biggest first-half percentage plunge since 1962.

All three indexes posted their second straight quarterly declines. The last time that happened was in 2015 for the S&P and the Dow, and 2016 for the Nasdaq.

The year began with spiking cases of COVID-19 due to the Omicron variant. Then came Russia's invasion of Ukraine, decades-high inflation and aggressive interest rate hikes from the Federal Reserve, which have stoked fears of a possible recession.

"All year it’s been a tug-of-war between inflation and slowing growth, balancing tightening financial conditions to address inflation concerns but trying to avoid outright panic," said Paul Kim, chief executive officer at Simplify ETFs in New York. "I think we are more than likely already in a recession and right now the only question is how harsh will the recession be?"

"I think it’s very unlikely that we’ll see a soft landing," Kim added.

Economic data released on Thursday did little to allay those fears. Disposable income inched lower, consumer spending decelerated, inflation remained hot and jobless claims inched higher.

"We’ve started to see a slowdown in consumer spending," Said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. "And it seems that inflation is taking its toll on the average consumer and that translates to corporate earnings which is what ultimately drives the stock market."

The graphic below shows year-on-year growth of core inflation indicators, all of which suggest that while a peak appears to have been reached in March, they all continue to soar well above the Fed's average annual 2% target:

Graphic: Inflation - https://graphics.reuters.com/USA-STOCKS/egvbkgwxypq/inflation.png

According to preliminary data, the S&P 500 lost 32.58 points, or 0.85%, to end at 3,786.25 points, while the Nasdaq Composite lost 146.95 points, or 1.31%, to 11,030.95. The Dow Jones Industrial Average fell 219.61 points, or 0.71%, to 30,809.70.

Of the 11 major sectors in the S&P 500, energy is only one showing a year-to-date gain, aided by crude prices spiking over supply concerns due to Russia-Ukraine conflict. [O/R]

The major stock indexes showed monthly losses, with the S&P 500 logging its largest June percentage decline since the financial crisis.

Second-quarter reporting season begins in several weeks, 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.

Worries over inflation dampening consumer demand and threatening profit margins will have market participants listening closely to forward guidance.

Shares of Walgreens Boots Alliance (NASDAQ:WBA) Inc fell after its quarterly profit plunged 76%, hurt by its opioid settlement with Florida and a decrease in U.S. pharmacy sales on waning demand for COVID-19 vaccinations.

S&P 500 closes the book on its biggest first-half plunge since 1970
 

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Comments (45)
Jack Peterson
Jack Peterson Jul 01, 2022 7:38AM ET
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The Monopoly money of the last 15 years and especially the last 2 years has caused excessive exuberance and the massive spending has created out of control inflation.. there is only 1 thing the central banks around the world can collectively do if they want to save their legitimacy and that is to tighten the money supply, this is not rocket science, they just try to make it harder than it is.. we actually pay these bankers thats the sad part
Mark Jannetty
Mark Jannetty Jul 01, 2022 6:13AM ET
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and Brandon sets another record!
99
99 Jul 01, 2022 12:36AM ET
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If you hadn't noticed, this is just how the privately owned Federal Reserve acts. They manipulate economies, forcing booms and busts. Elites profit from the boom and buy up properties when prices are low. All 3 US presidents who tried to reduce the power of the Fed were assassinated.
Brad Albright
Brad Albright Jul 01, 2022 12:36AM ET
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This commenter has no credibility. The Federal Reserve was created in 1913. The assassinated US presidents were Abraham Lincoln (April 15, 1865), James Garfield (Sept. 19, 1881), William McKinley (Sept. 14, 1901) and John F. Kennedy (Nov. 22, 1963). Do not listen to these know-nothings kooks.
Jay Garrelts
Jay Garrelts Jun 30, 2022 7:22PM ET
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Interesting some mad investors they’re mad at Joe Joe didn’t make the system where you can’t win
John Laurens
John Laurens Jun 30, 2022 4:38PM ET
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THANK YOU, PRESIDENT PANTS POOPER! AND THE VERY SPECIAL PEOPLE WHO VOTED FOR HIM!
Jay Garrelts
Jay Garrelts Jun 30, 2022 4:38PM ET
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Well those people are your fellow americans and most likely didn’t vote for him this right vs left thinking when they all work for same people Is the exact reason things are this way
ZS Beck
ZS Beck Jun 30, 2022 4:38PM ET
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Jay Garrelts I Voted for the 2000$ he promised and delivered. What can I say? They bought the election and now they built back a better plan unfolding right now
Jay Garrelts
Jay Garrelts Jun 30, 2022 4:38PM ET
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ZS Beck Do what 90% of stocks are owned by the 1% we just doubled the money supply And sold an ungodly amount of land and businesses to China that’s what’s really going on
Brad Albright
Brad Albright Jun 30, 2022 4:38PM ET
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Actually, it's most likely your fellow. Americans DID vote for Biden.
John Laurens
John Laurens Jun 30, 2022 4:38PM ET
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Brad Albright  as did the dead ones and many more multiple times..
Dialed Dial
Dialed Dial Jun 30, 2022 4:20PM ET
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Thanks brandon and insane dem socialistsWe will not let you turn this country into Venezuela!
Lionel Laurent
Lionel Laurent Jun 30, 2022 2:54PM ET
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Le pire président des États Unis , incapables de gérer un pays
Kate Davis
Kate Davis Jun 30, 2022 2:54PM ET
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It pairs to the worst 'president' since 1970.
Mitchel Pioneer
Mitchel Pioneer Jun 30, 2022 2:51PM ET
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"US Stocks Trim Losses," the most prolific headline in internet news history.  And we've yet to have the miracle "in late trade," where savvy "investors" from around the world coordinate a mass "buying" spree in the final hour.  A comedy for the ages.
Mark Jannetty
Mark Jannetty Jun 30, 2022 2:00PM ET
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second half going to be different when the same Brandon in charge? 2024 will be a good year for market. people will buy knowing its the end of LGB.
 
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