Wall Street gains, but caution prevails at the start of the third quarter

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, June 30, 2022. REUTERS/Brendan McDermid/Files

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  • US factory activity slowed more than expected in June
  • Kohl’s Retreats After Cancellation of Franchise Group Sale
  • Micron’s pessimistic forecast predicts chip sale
  • Indices: Dow Jones 0.74%, S&P 0.65%, Nasdaq 0.41%

NEW YORK (Reuters) – Wall Street gained in light trading on Friday, the first session of the second half of 2022, as investors headed into the long weekend in search of the next catalyst to move the market.

All three major US stock indexes rebounded from session lows, last being modestly higher in the wake of the stock market’s worst first half in decades.

All three were on their way to make up for weekly losses.

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“It’s a Friday before a long summer weekend, so it’s not a big day,” said Tim Gresky, senior portfolio strategist at Ingalls & Snyder in New York.

Market participants are now looking at the second-quarter earnings season, the Labor Department’s June employment report, and the Federal Reserve’s monetary policy meeting expected later in July.

The microchip sector fell sharply after Micron Technology Inc (MU.O) warned of cooling demand. Read more

Micron shares fell 2.7%, sending the Philadelphia SE Semiconductor (.SOX) index down 3.8%.

Concerns about declining demand in the face of decades of high inflation were reflected in the Institute for Supply Management’s (ISM) Purchasing Managers’ Index, which showed a slowdown in the prices of new orders inputs.

The ISM report appears to support the view that the economy is cooling and inflation appears to have passed its peak. This has raised questions about whether the Fed will have room to maneuver in a peaceful direction after the second consecutive rate hike of 75 basis points expected in July.

“The Fed will need to see more evidence to change its mind about continued rate hikes,” Greskey added. “There is still a lot of uncertainty about the economy and inflation despite early signs that inflation may have peaked.”

The Dow Jones Industrial Average increased 227.33 points, or 0.74%, to 31002.76 points, the Standard & Poor’s 500 increased 24.73 points, or 0.65%, to 3,810.11 points, and the Nasdaq Composite increased 45.03 points or. 0.41% to 11073.77.

Of the 11 major S&P 500 sectors, utilities (.SPLRCU) had the most gains, while technology (.SPLRCT) had the lowest.

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, a weaker negative/positive ratio than it was a year ago, according to Refinitiv data.

The possibility of profit margins taking a hit from harmful inflation and dwindling consumer demand will make market participants listen closely to forward guidance.

Analysts now expect S&P 500 total earnings for the second quarter to grow 5.6%, down from the 6.8% forecast at the start of the quarter, according to Refinitiv.

Meta Platforms Inc (META.O) fell 1.5721% after Facebook CEO Mark Zuckerberg warned employees to prepare for a deep economic downturn. Read more

Shares of department store chain Kohl’s Corp (KSS.N) fell 17.3% after its decision to halt talks about a possible sale of Franchise Group (FRG.O). Read more

Advance issues outnumbered declining issues on the New York Stock Exchange by 1.70 to 1; On the Nasdaq, the 1.27 to 1 ratio favored heights.

S&P 500 hits new 52-week high and 48 new low; Nasdaq Composite recorded 8 new highs and 201 new lows.

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Stephen Kolb reports. Additional reporting by Amruta Khandekar and Sruthi Shankar in Bengaluru. Editing by David Gregorio

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