Wall Street slipped, Dow braced for worst first half since 1962

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

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  • US consumer spending rose moderately in May; Inflation is higher
  • The S&P 500 headed for the worst first half since 1970
  • Indices down: Dow 0.72%, Standard & Poor’s 0.58%, Nasdaq 0.81%

June 30 (Reuters) – U.S. stocks tumbled on Thursday, sending the Dow Jones index up for its worst six months since 1962, on concerns that persistent efforts by central banks to tame inflation will hamper global economic growth.

Fears of slower growth and higher prices have spread to markets, with recession fears taking center stage as monetary policymakers around the world look to aggressively increase borrowing costs.

Federal Reserve Chairman Jerome Powell pledged on Wednesday not to allow the US economy to slide into a “higher inflation regime,” even if it means raising interest rates to levels that put growth at risk. Read more

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The heavy Nasdaq Composite (.IXIC) came off session lows but still braced for its biggest drop ever in the first half, while the S&P 500 (.SPX) tracked its biggest January-June drop since 1970.

All three major indices are on track to post their second consecutive quarterly declines for the first time since 2015.

Federal Reserve policy makers in recent days have projected a second rate hike of 75 basis points in July even as economic data paints a bleak picture for the American consumer.

“Until inflation meaningfully rolls over, which it will take at this point, I think it’s going to be really hard for the market to find a bottom and start to pick up,” said Ross Mayfield, Baird investment strategy analyst.

Meanwhile, consumer spending, which accounts for more than two-thirds of US economic activity, rose less-than-expected in May, indicating a tepid rebound in growth in the second quarter, while inflation maintained its upward trend. [nL1N2YH162]

“A lot of investors were expecting the inflation data to really start to come down,” said Sam Stovall. “But what we found is that it’s more difficult, that the inflation data stays higher for longer and may not have peaked.” , chief investment strategist at CFRA.

Big-cap growth stocks including Microsoft Corp (MSFT.O), Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O), and Tesla Inc (TSLA.O) fell between 0.5% and 2% , which led to the leading declines in the day.

At 12:01 p.m. EDT, the Dow Jones Industrial Average (.DJI) was down 224.38 points, or 0.72%, at 30,804.93, and the S&P 500 (.SPX) was down 22.26 points, or 0.58%, at 3,796.57 points, And the Nasdaq Composite Index (.IXIC), down 90.17 points, or 0.81%, to 11087.72 points.

Heading into the second half of the year, battered markets will continue to focus on inflation, unemployment, and interest rate increases along with their impact on corporate earnings.

“There is a feeling that the earnings picture will be the next shoe to be dropped and that the downward revisions to earnings will spur another downward move in the market,” Baird’s Mayfield said.

Walgreens Boots Alliance Inc (WBA.O) fell 4.5% as the drugstore chain maintained its full-year profit forecast due to a drop in COVID vaccines. Read more

Declining issues outnumbered advancers by 1.87 to 1 on the New York Stock Exchange and by 1.79 to 1 on the Nasdaq.

The S&P recorded a new 52-week high and 42 new low, while the Nasdaq made 11 new highs and 332 new lows.

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Additional reporting by Shriyashi Sanyal and Amruta Khandekar in Bengaluru; Additional reporting by Medha Singh. Editing by Aaron Coeur

Our Standards: Thomson Reuters Trust Principles.

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