S&P 500 Index Extends Largest First-Half Decline In Five Decades

Barry Adams
30 Jun, 2022
New York City

U.S. stocks extended losses in the quarter and first half after inflation and economic slowdown worries dominated market sentiment. 

The S&P 500 index dropped 1.2% to 3,772.45 and the Nasdaq Composite index fell 1.6% to 10,999.08. 

Weekly initial claims for the week ending June 25 decreased by 2,000 to 231,000, the Labor Department reported today. 

The continuing claims for the week ending June 18 decreased by 3,000 to 1.328 million.

However, the strength in the labor market was overwhelmed by the elevated inflation data today. 

The personal consumption expenditures index on an annual basis increased at 6.3% in June and matched the rate in May, the data from the Bureau of Economic Analysis showed on Thursday. 

The core index, excluding food and energy prices, declined to 4.7% in May from 4.9% in April but still at elevated levels last seen in the 1980s.  

The S&P 500 index was down 20% in the year to Wednesday and the index is set to deliver its worst first half of the year in 52 years. 

The yield on 10-year Treasury notes declined to 3.004%. 

Futures of crude oil dropped 3.7% to $105.76 a barrel and natural gas dropped 41 cents to $6.08 a thermal unit. 

Retail stocks led the decliners after luxury furnishing retailer RH Inc issued its second revenue warning in a month. 

RH dropped 10.5% to $212.05 after the retailer said second quarter revenues are estimated to decline between 1% and 3% and fiscal 2022 sales are estimated to fall between 2% and 5% from the previous range between zero and 2% growth issued on June 2. 

Tech stocks continued their slide in the morning trading and the tech-heavy Nasdaq is set to decline more than 20% in the second quarter. 

Apple Inc fell 1.9%, Alphabet declined 2.2%, Amazon dropped 2.3%, and Meta eased 0.4%. 

 

European Indexes Log Worst Quarterly Losses Since 2020 

Market indexes across Europe faced selling pressure after French inflation rose at the fastest pace since the euro introduction and German jobless rate rose unexpectedly. 

The euro zone unemployment rate fell to a record low 6.6% in May from 6.7% in April and 8.1% a year ago, the eurostat data showed on Thursday. 

The number of unemployed people in the currency zone fell to 11.004 million, a decline of 2.165 million from a year ago. 

Youth unemployment rate declined to 13.1% in May from 13.8% in April. 

The EU 27 jobless rate held at 6.1% in May. 

German retail sales in May increased 0.6% after adjusting for inflation and rose 2.0% in nominal terms from April, the Federal Statistical Office or destatis said on Thursday.

From a year ago, real retail sales declined 3.6% and nominal retail sales rose 4.1% in May. 

June unemployment rate adjusted for seasonal factors in Germany increased to 5.3% from 4.9% in May, Destatis data showed on Thursday. 

Jobless rate a year ago was 5.7%. 

The unemployment rate increased unexpectedly after Ukrainian refugees were counted in people searching for jobs. 

French inflation rate rose at the fastest pace since the euro was introduced in 1999. 

Consumer price inflation rose 5.8% in June after rising at 5.2% in May, according to the latest data released by Insee on Thursday. 

The inflation rate a year ago was 1.5%. 

The DAX index dropped 2.5% to 12,674.51, the CAC-40 index declined 2.6% to 5,874.96, and the FTSE 100 index fell 2.2% to 7,152.98. 

The German index is set to drop more than 20% and French index over 17% in the first half of 2022.  

The FTSE index in London is set to close the first half down more than 4%.  

The indexes sank more after the release of U.S. inflation data. 

The core personal consumption expenditures price index increased to 4.7% in May, lower than 4.9% in April, the U.S. Commerce Department reported on Thursday. 

The inflation measure declined in May but still elevated near the levels last seen in the 1980s dragged market indexes in New York and in Europe. 

BioNTech SE gained 1.9% to 137.50 euros after the company along with Pfizer Inc were awarded a new vaccine order worth $3.2 billion. 

Uniper SE dropped 117.10% to 13.72 euros after the German Utility withdrew its annual outlook for the fiscal year 2022 citing natural gas restrictions from Russia-based Gazprom. 

Bunzl Plc increased 1.7% to 2,717.0 pence after the U.K.-based business supplies distributor lifted its outlook for the year.  

Saab AB jumped 3.7% to 420.90 Swedish kroner after the defense group won an order of 7.3 billion kroner from the Swedish government.