A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, USA, June 22, 2022. REUTERS / Brendan McDermid
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- Consumer spending in the US in May rises moderately; inflation stays hot
- The Nasdaq recorded the largest percentage drop in January-June
- Falling indices: Dow 0.82%, S&P 0.88%, Nasdaq 1.33%
NEW YORK, June 30 (Reuters) – Wall Street ended lower on Thursday, crossing the finish line of a month and a sad quarter, a sad tail in the worst first half of the S&P 500 in more than half a century.
The top three U.S. stock indexes ended the month and second quarter in negative territory, with the S&P 500 recording the sharpest percentage drop in the first half since 1970.
The Nasdaq had its biggest percentage drop in January-June, while the Dow suffered its biggest percentage drop in the first half since 1962.
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All three indices recorded their second consecutive quarterly decline. The last time it happened was in 2015 for the S&P and the Dow, and in 2016 for the Nasdaq.
The year began with an increase in COVID-19 cases due to the Omicron variant. Then came the invasion of Ukraine by Russia, decades of high inflation, and aggressive rises in Federal Reserve interest rates, which have fueled fears of a possible recession. Read more
“The whole year has been a struggle between inflation and the slowdown in growth, balancing the tightening of financial conditions to address inflation issues, but trying to avoid total panic,” said Paul Kim, executive director of Simplify ETFs in New York. “I think we’re probably already in recession and right now the only question is how hard will the recession be?”
“I think it’s very unlikely we’ll see a soft landing,” Kim added.
Economic data released on Thursday did little to alleviate those fears. Disposable income fell, consumer spending slowed, inflation remained hot and unemployment claims rose. Read more
“We’re starting to see a slowdown in consumer spending,” said Oliver Pursche, senior vice president of Wealthspire Advisors in New York. “And it looks like inflation is taking its toll on the average consumer and that translates into corporate profits, which is what ultimately drives the stock market.”
The chart below shows year-on-year growth in underlying 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 2-year average target. % of the Fed:
The Dow Jones Industrial Average (.DJI) fell 253.88 points, or 0.82%, to 30,775.43, the S&P 500 (.SPX) lost 33.45 points, or 0.88%, to at 3,785.38 and the Nasdaq Composite (.149, 16) fell16. 1.33%, to 11,028.74.
Eight of the top 11 S&P sectors ended lower, with utility companies (.SPLRCU) leading gains and energy (.SPNY) with the largest percentage drop.
But energy was only the major sector to record a gain until the year, helped by rising crude oil prices due to supply concerns due to the conflict between Russia and Ukraine.
Major stock indices lost ground in June, and the S&P 500 recorded its largest percentage drop in June since the financial crisis.
The second quarter reporting season begins in a few weeks and 130 of the S&P 500 companies have previously announced it. Of these, 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 data from Refinitiv.
Concerns about inflation slowing consumer demand and threatening profit margins will cause market participants to listen carefully to the advanced guidance.
Walgreens Boots Alliance Inc (WBA.O) fell 7.3% as its quarterly profits fell 76%, hurt by its opioid deal with Florida and declining U.S. pharmacy sales the decrease in demand for COVID-19 vaccinations. Read more
The decrease in emissions outnumbered those advancing on the NYSE by a ratio of 1.75 to 1; on the Nasdaq, a 1.52 to 1 ratio favored declines.
The S&P 500 recorded a new 52-week high and 42 new lows; the Nasdaq Composite recorded 17 new highs and 367 new lows.
The volume on US stock markets was 12.58 billion shares, compared to the average of 12.86 billion in the last 20 trading days.
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Report by Stephen Culp; Additional report by Shreyashi Sanyal and Amruta Khandekar in Bangalore; Edited by David Gregorio
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