US stocks fell on Thursday, with major averages posting sharp declines for June and the second quarter and first half of 2022 as fears of rising inflation and the prospect of a recession weighed heavily on risky assets.
The S&P 500 fell 0.9% Thursday to 3,785.38, ending the first half of 2022 down 20.6% on its worst start since 1970. The Dow Jones ended Thursday’s session at 30,775.43, down 15.3% for the current year. History of the worst first half since 1962. The Nasdaq’s 29.5% drop so far in 2022 was the worst first half ever.
The risk aversion mood in equities has extended to other asset classes including oil. West Texas Intermediate crude futures fell to just over $105 a barrel and closed their first monthly decline since November 2021. Bitcoin prices fell below $19,000.
Stocks also maintained a decline during Thursday’s session after the new data reflected high inflation rates and a decline in real consumer spending. Real personal spending fell more-than-expected 0.4% in May after rising 0.7% in April, suggesting consumers are pulling back as prices rise. And while core personal consumption expenditures – the Fed’s preferred measure of inflation – slowed slightly more than expected in May, the measure still held its highest levels in nearly several decades. That’s up 4.7% from a year ago compared to an expected 4.8% increase, according to Bloomberg data. Headline inflation, which includes energy and food price changes, also rose slightly less than expected, or at an annual rate of 6.3% to match April’s pace.
Stocks have been hit hard for months now as investors weigh persistently severe inflation against the risks of deflation, as the Federal Reserve responds to inflation with faster tightening. With Wall Street stepping up its warnings of a recession, the cyclical sectors most vulnerable to changes in economic activity were delayed. The energy sector – which led at the start of 2022 – has been the slowest in the S&P 500, down 17% in June while still maintaining a gain of more than 29% for the year to date. And while all 11 major S&P 500 sectors closed in June with losses, defensive healthcare, consumer goods and utilities that are typically seen as more resilient in economic downturns outperformed.
Federal Reserve Chairman Jerome Powell stressed this week that the central bank’s main goal is to bring down the inflation rate at its fastest rate in more than 40 years, suggesting that this goal will take priority over fully maintaining activity elsewhere in the economy.
“Certainly there is a risk,” Powell said at the European Central Bank’s annual Economic Policy Roundtable in Portugal on Wednesday. .”
Powell suggested earlier in June that a 50 or 75 basis point rate hike would likely be on the table after the Fed’s July meeting. In the weeks that followed, a number of other key central bank officials emphasized that the latter option would likely be the most appropriate option, with inflation and consumer inflation expectations remaining high.
bed bath behind (BBBY) Shares extended losses after dropping more than 23% on Wednesday. The retailer reported same-store sales that sank more than 20% last quarter, and also announced that CEO Mark Triton will leave the company and the board, effective immediately, and board member Sue Goff will take over on a temporary basis.
RH (R) Shares fell after the furniture company cut its full-year forecast to forecast lower revenue, citing a “deteriorating macroeconomic environment” and lower-than-expected demand. RH now sees revenue fall between 2% and 5% this year, versus previous sales forecasts of 2%.
Constellation brands (STZ) It fell even after the beverage company released first-quarter results that beat estimates in most major metrics. Comparative earnings per share came in at $2.66 versus the expected $2.50, according to Bloomberg data, and beer net sales of $1.9 billion were $160 million better than expected.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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