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

A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 22, 2022. REUTERS/Brendan McDermid

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NEW YORK, June 30 (Reuters) – Wall Street closed the session lower on Thursday, crossing the finish line of a dismal month and quarter, a dismal coda to the S&P 500’s worst first half in more than a half-century.

All three major U.S. stock indexes ended the month and the second quarter in negative territory, with the S&P 500 posting its biggest first-half percentage decline since 1970.

The Nasdaq suffered its biggest percentage drop from January to June, while the Dow Jones suffered its biggest percentage drop in the first half since 1962.

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

The year began with a spike in COVID-19 cases due to the Omicron variant. Then came Russia’s invasion of Ukraine, decades-high inflation and aggressive interest rate hikes by the Federal Reserve, which stoked fears of a possible recession. Read more

“Throughout the year, it’s been a tug of war between inflation and slowing growth, balancing tighter financial conditions to address inflation concerns but trying to avoid outright panic,” he said. said Paul Kim, managing director of Simplify ETFs in New York. “I think we are more than likely already in a recession and right now the only question is how hard will the recession be?”

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

Economic data released Thursday did little to allay those fears. Disposable income fell slightly, consumer spending slowed, inflation remained high and unemployment insurance claims rose slightly. Read more

“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 inflation is taking its toll on the average consumer and that translates into corporate profits, which ultimately drives the stock market.”

The chart below shows the year-on-year growth in core inflation indicators, all of which suggest that although a peak appears to have been reached in March, they are all continuing to rise well above above the Fed’s 2% average annual target:

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

Of the 11 major sectors in the S&P 500, energy (.SPNY) is the only one to post a year-to-date gain, helped by soaring crude prices due to supply issues from the Russian dispute -Ukrainian.

Major stock indexes posted monthly losses, with the S&P 500 posting its biggest percentage drop in June since the financial crisis.

The second quarter reporting season begins in several weeks and 130 of the S&P 500 companies have announced in advance. Of these, 45 were positive and 77 were negative, giving a negative-to-positive ratio of 1.7 stronger than in the first quarter but weaker than a year ago, according to Refinitiv data. .

Concerns about inflation dampening consumer demand and threatening profit margins will cause market participants to listen closely to forecasts.

Shares of Walgreens Boots Alliance Inc (WBA.O) fell after its quarterly profit plunged 76%, hurt by its opioid deal with Florida and a drop in US pharmacy sales due to lower demand for vaccines against COVID-19. Read more

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Reporting by Stephen Culp; Additional reporting by Shreyashi Sanyal and Amruta Khandekar in Bengaluru; Editing by David Gregorio

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