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

Published 06/30/2022, 06:54 AM
Updated 06/30/2022, 10:42 PM
© 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

© 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.

© 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

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.

Latest comments

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
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.
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.
Interesting some mad investors they’re mad at Joe Joe didn’t make the system where you can’t win
THANK YOU, PRESIDENT PANTS POOPER! AND THE VERY SPECIAL PEOPLE WHO VOTED FOR HIM!
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
Actually, it's most likely your fellow. Americans DID vote for Biden.
 as did the dead ones and many more multiple times..
Thanks brandon and insane dem socialistsWe will not let you turn this country into Venezuela!
"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.
I'd like to take this chance to thank Pres Biden for keeping his campaign promises to stimulate the economy and unite the country. Great job there buddy. This country won't survive much more of your brand of unity and prosperity.
hi Good 👍 embisting
hu
probably right now, come together, buy stocks a~z
The federal reserve is unfit and unqualified to regulate the economy. They had many years before Covid and many months after to implement incremental rates to curb inflation. Now they're declaring war on inflation that they caused and up until recently they denied was occurring and are screaming recession is inevitable and necessary. These are the same people that cut rates three times 2019Q4 on forecasts that there was potential for slower growth in 2020. Earlier in the year 2019 they raised rates three times which in a rare instance was appropriate and timely. As things stand now, the fed is still suppressing rising yields after having hiked rates and purportedly intend another .75 rate hike in July. Under different circumstances, the federal reserve would now move into QE. They can't, having used up their tools to avoid moderately slowed growth when it wasn't necessary. History will remember Powell for having engineered an inflationary recession.
Mass layoffs and missed earnings haven't really started yet.
Lol Atlanta fed GDP forecast for Q1 is now -1.0%. But Powell says the economy is strong and can take the Fed hikes. Pivot coming in 3,2,1.....
*Q2
At some point crypto will take off again.  Until then, I am staying away.....
do you like the show? refill your popcorn, now comes the second half
worst first half in 60yrs, nothing unusual about that. nothing to see hear move along and buy the dip. sarc/on.
testing
Mr. B basically says when you see blood on the wall street, buy stocks A to Z.
hi
pre-July 4th rally appears warming up.
Wall Street rallies as usual. America prevails.
Another 500 point loss on its way to being criminally manipulated out of the system.  Midway through the year, they've probably set a record for the number of points in losses, criminally removed from the US Ponzi Scheme.  Another clear demonstration of Wall Streets power, as they laugh in the face of the global investment community while criminally defrauding the US working class in broad daylight.  Another notch in the belt for the BIGGEST INVESTMENT JOKE IN THE WORLD.
if the stock market is an inflation edge (You would rather have stocks worth something then dollars worth nothing), then a reversal is in the cards
working for the shorts loser.. spx up total % wise
garbage article, inflation data was showing it had gone down. all these articles are garbage...
Great time to buy in at the Casino. No doubt The FED will ensure that markets are green by end of week. Can't have an unhappy July 4th holiday weekend can we !?  These markets are so fake but the rosy        plastic is slowly peeling off!
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