Stocks slide, with Wall Street closing out worst first half since 1970

6/30/2022 11:08:00 PM

S&P 500 ends a dismal first half — its worst since 1970 — as inflation, recession fears take toll

S&P 500 ends a dismal first half — its worst since 1970 — as inflation, recession fears take toll

On the last day of June, the S&P 500 index is on track for its worst first half of the year since 1970.

“Investor sentiment has been rattled this year, dominated by concerns around persistently high inflation, slowing economic momentum and an aggressive Fed,” said Nicole Tanenbaum, partner and chief investment strategist at Chequers Financial Management.

Advertisementmost recent, in mid-JuneAdvertisementIn sharp contrast to the first year of the pandemic, when the Fed and Congress moved with blazing speed to shore up the American economy, monetary policy this year was designed to clamp down on an economy running too hot. Then the Fed’s rhetoric around fighting inflation grew far more aggressive. Exacerbated by Russia’s invasion of Ukraine and the sprawling international sanctions, energy and commodity prices shot up.

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The stock market is just a chart of wealthy people's feelings. Opportunity 🙌

Wall Street plunges, S&P 500 set for worst first-half since 1970U.S. stocks tumbled on Thursday, setting the S&P 500 for its worst first six months since 1970, on concerns that central banks determined to tame inflation will hamper global economic growth. This president and his liberal cabinet is the worst thing our country has experienced in 50+ years. I don’t believe they could have tanked our country any worse, even if that was the plan. I’m disgusted.

S\u0026P 500 Forecast: Index Stabilizes WednesdayThe S&P 500 did very little Wednesday, and considering how rough the selloff was on Tuesday, one has to look at that as a bit of a moral victory. Forex Stocks

Nevada County wildfire threatens 500 buildingsA wildfire in Northern California has forced evacuations as it threatens about 500 homes and other buildings. Authorities say the blaze erupted Tuesday afternoon near the Yuba River in Nevada

Northern California Wildfire Threatens 500 BuildingsA wildfire in Northern California has forced evacuations as it threatens about 500 homes and other buildings. Authorities say the blaze erupted Tuesday afternoon near the Yuba River in Nevada County and has spread to more than 500 acres. Fire officials say power lines also are threatened in the Sierra Nevada area and there are unconfirmed reports that some buildings may have burned. Another blaze that erupted Tuesday morning in San Luis Obispo County threatened about 50 buildings and is only partially contained. However, no building damage or injuries are reported. They’re among several Northern California fires that erupted Tuesday as the state bakes under summer heat.

Santa Rosa man arrested for over 500 pounds of illegal fireworksIn mid-June, detectives from the Santa Rosa Police Department's Property Crimes Team received information about an individual that was in possession of a large quantities of illegal and dangerous fireworks.

Northern California Wildfire Threatens 500 StructuresA wildfire in Northern California has forced evacuations as it threatens about 500 homes and other buildings.

ArrowRight The slump follows a record-shattering performance in 2021, and all the major indexes remain above their levels before the pandemic began in 2020.(.GET STARTED Supply chains continued to be stretched and stressed, and this is not good for the economy.A wildfire that erupted in Nevada County forced evacuations as it threatened about 500 homes and other buildings Tuesday, authorities said.

Still, inflation has pulled on the stock market like an anvil, depressing consumer and business sentiment and forcing political leaders to scramble, while a compounding array of geopolitical uncertainty added to the volatility. Advertisement “Investor sentiment has been rattled this year, dominated by concerns around persistently high inflation, slowing economic momentum and an aggressive Fed,” said Nicole Tanenbaum, partner and chief investment strategist at Chequers Financial Management. All the three main indexes are bound to post their second straight quarterly declines for the first time since 2015. There are growing signs that a softer stock market, the rising price of food, fuel and other essentials, as well as higher borrowing costs, have given many consumers pause after frenetic levels of spending in the past year. A lack of certainty is toxic for stock markets and considering that so many companies have to start talking about their comps being difficult to overcome, it does make a lot of sense that stocks will start to lose ground. On Thursday, new data showed that growth in consumer spending had slowed but had not declined. "People are raising cash going into earnings season," said Josh Wein, portfolio manager at Hennessy Funds. Similarly, other data revealed that weekly jobless claims remained very low, a positive sign as economists monitor the pace of layoffs. Authorities earlier said the fire began with a burning building and the flames spread to nearby dry vegetation.

But the sharp pullback in stock portfolios underscores a souring mood on Wall Street and may serve as a preview of flailing corporate earnings: More than $8 trillion has been wiped out of the stock market this year. A lot of people are waiting to hear from companies as to what is actually happening and the state of the consumer, trying to get incremental info before they really commit to stocks. This is a downtrend that has a lot of things working against it, so it’s not a huge surprise to see sellers come back into the market as they did during the previous session. And just a few weeks ago the state of the markets looked even more grim. Although stocks have seesawed upward, as some investors went bargain hunting. Advertisement “Until investors start to see evidence that inflation is abating and the Federal Reserve begins to signal a shift in policy, we expect the markets to continue down this choppy path,” Tanenbaum said. It is because of this that I will be paying close attention to the 4000 level if for some reason we get there soon, but I just don’t see that happening. The central bank has raised its benchmark interest rate three times this year and signaled that four more hikes are on deck. A blaze that erupted Tuesday morning in San Luis Obispo County burned through grass and brush.

The most recent, in mid-June , came in at three-quarters of a percentage point, the central bank’s largest since 1994. Raising interest rates make mortgages, auto loans and all manner of business investment more expensive; but it also serves to cool an overheated economy by dampening consumer spending, thus cutting demand for goods and services to help bring prices down. Top Forex Brokers. However, investors and some businesses worry that the Fed’s action may slow the economy too much, triggering recession and a wave of layoffs. A recent Bankrate survey of 17 economists put the odds of a recession in the next 18 months at 50-50, said Mark Hamrick, a senior economic analyst for the consumer financial services company. Advertisement Each rate increase has been quickly followed by sharp stock market sell-offs, contributing to a broader rout that has pushed the S&P 500 into a bear market — defined as a 20 percent drop from a recent high.

Now the broad-based index has post its worst first-half of the year since 1970′s 21 percent decline, says Sam Stovall, chief market strategist at CFRA research. What’s more, geopolitical conflicts and supply chain disruptions that are beyond the control of central bankers are compounding Wall Street’s problems and those of everyday consumers who are getting clobbered at the gas pump and the grocery store. In sharp contrast to the first year of the pandemic, when the Fed and Congress moved with blazing speed to shore up the American economy, monetary policy this year was designed to clamp down on an economy running too hot. Then the Fed’s rhetoric around fighting inflation grew far more aggressive. Exacerbated by Russia’s invasion of Ukraine and the sprawling international sanctions, energy and commodity prices shot up.

Advertisement “That exerted downward pressure on economic growth and upward pressure on inflation, and real incomes fell,” said Kristina Hooper, the chief global market strategist at Invesco. “In many respects, this was a ‘perfect storm,'” she said. Even consumer spending, the main engine of the U.S. economy, which had adapted to the quirks and roadblocks of life during the pandemic, is showing signs of slowing again.

Higher interest rates and a slowing savings rate are putting a damper on families’ budgets. And some retailers have been caught off guard in recent months, as consumers have turned away from the shopping patterns of the early pandemic-era, leaving a glut of appliances and televisions on store shelves and warehouses. Overall consumer spending rose by 0.2 percent in May, down from 0.9 percent growth a month earlier, according to data Thursday by the Bureau of Economic Analysis.

The BEA’s measure of inflation remained steady at 6.3 percent. Advertisement On Thursday, the core personal consumption expenditures index, the Fed’s preferred gauge of inflation, rose 4.7 percent. That’s 0.

2 percentage points less than the month before, but still close to a four-decade high. Economists had expected the index to come in at 4.8 percent, according to CNBC. “People are eager to call the moment of peak inflation, but we’re still waiting to see that,” Hamrick said, adding: “For many people the current experience of inflation is unlike anything they’ve experienced in their lifetimes.” Others are more optimistic.

LPL Financial Chief Economist Jeffrey Roach points out that the rate of inflation for goods, as opposed to services, appears to be slowing. “This is a net positive for investors as the core year over year growth rate has consistently fallen since February,” Roach said in an email. Advertisement The all-important job market will offer a crucial sign whether the actions of the Fed might lead to a contraction. Weekly jobless claims, a proxy for layoffs, have drifted higher in recent weeks, a sign that the labor market could be softening. Initial claims reported by the Labor Department on Thursday decreased by 2,000 to 231,000, but the four-week moving average jumped 7,250 from the previous week’s revised average.

Meanwhile, cryptocurrencies suffered some of their worst losses in several years during the latest quarter as both retail and institutional investors took a hit on a number of their biggest bets. The ambitious South Korean crypto project Terra — with both a token and a so-called “algorithmic stablecoin” — saw much of its value wiped out over a few calamitous days in May. (The stablecoin lost two-thirds of its value, while the token Luna fell more than 95 percent.) That triggered losses throughout the market, including to crypto-bank Celsius, which would go on to freeze assets, and hedge fund Three Arrows Capital, which would fall into liquidation this week. Advertisement Among the biggest bellwethers of the crash has been bitcoin, the widely held and, in the view of many investment experts, most important cryptocurrency.

Thanks to crypto-company unravellings and larger economic factors like the interest-rate hike, bitcoin dropped more than 55 percent since April 1 to land at barely $19,000 by the end of the first half of the year. Depending on where the price finds itself at midnight, the quarterly plunge may prove to be the biggest in more than a decade. Steven Zeitchik contributed to this report. Comment .