The S&P 500 closes the book on its biggest slide in the first half since 1970

A trader works at the New York Stock Exchange (NYSE) in New York City, US, June 22, 2022. REUTERS/Brendan McDermid

NEW YORK (Reuters) – Wall Street closed lower on Thursday, crossing the finish line for a grim month and quarter, marking a dismal lull for the S&P 500, the worst in more than half a century.

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

The Nasdaq saw its largest percentage drop ever in the January-June period, while the Dow Jones suffered its largest percentage drop in the first half since 1962.

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

The year started with a spike in COVID-19 cases due to the Omicron variant. Then came the Russian invasion of Ukraine, decades of high inflation, and sharp interest rate hikes by the Federal Reserve, which raised fears of a possible recession. Read more

“Throughout the year there was a tug of war between inflation and slowing growth, balancing tightening financial conditions to address inflation concerns but in an effort to avoid outright panic,” said Paul Kim, CEO of Simplify ETFs in New York. “I think we are more than likely to actually be in a recession, and the only question now is how severe will the recession be?”

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

Thursday’s economic data did little to allay those concerns. Income available for spending has fallen, consumer spending has slowed, inflation has remained high, and unemployment claims have risen. Read more

“We’re starting to see a slowdown in consumer spending,” said Oliver Burch, senior vice president at Wealthspire Advisors in New York. “It appears that inflation is negatively affecting the average consumer and that translates into corporate profits which ultimately drives the stock market.”

The chart below shows the annual growth of the core inflation indicators, all of which indicate that while they appear to have peaked in March, they all continue to rise above the Fed’s average annual target of 2%:

Dow Jones Industrial Average (.DJI) The Standard & Poor’s 500 Index fell 253.88 points, or 0.82%, to 30,775.43 (.SPX) It lost 33.45 points, or 0.88%, to 3785.38 points, and the Nasdaq Composite (nineteenth) It fell 149.16 points, or 1.33%, to 11,028.74 points.

Eight of the 11 major S&P sectors ended lower, with utilities (.SPLRCU) Leading gainers and energy (.SPNY) with the largest percentage decrease.

But energy has only been the main sector to gain year-to-date, buoyed by higher crude prices on supply concerns due to the conflict between Russia and Ukraine.

Major stock indexes fell in June, 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 companies in the S&P 500 have announced previously. Of those, 45 were positive and 77 were negative, resulting in a negative/positive ratio of 1.7 stronger than the first quarter but weaker than last year, according to Refinitiv data.

Concerns about inflation will dampen consumer demand and threaten profit margins, which will make market participants listen closely to future guidance.

Walgreens Boots Alliance, Inc (WBA.O) It fell 7.3% as its quarterly profit plunged 76%, impacted by its opioid settlement with Florida and a drop in US drugstore sales due to lower demand for COVID-19 vaccines. Read more

Low issues outnumbered advanced issues on the New York Stock Exchange by 1.75 to 1; On the Nasdaq, the ratio was 1.52 to 1 in favor of declining stocks.

S&P 500 set a new 52-week high and 42 new low; The Nasdaq recorded 17 new highs and 367 new lows.

Volume on US stock exchanges was 12.58 billion shares, compared to an average of 12.86 billion over the last 20 trading days.

Stephen Kolb reports. Additional reporting by Shriyashi Sanyal and Amruta Khandekar in Bengaluru. Editing by David Gregorio

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