U.S. Stocks Drop On Profit Growth Worries

Barry Adams
05 Jul, 2022
New York City

U.S. stocks fell on recession worries and elevated energy prices with the war in Ukraine showing no signs of ending.  

The S&P 500 index declined 1.9% to 3,751.63 and the Nasdaq Composite index dropped 0.9% to 11,029.55. 

After a three-day weekend, investors returned with recession anxieties and global economic slowdown worries. 

Investors are awaiting the jobs report on Friday and the release of Fed's latest minutes of meeting on Wednesday. 

President Biden's administration is negotiating with Chinese cabinet members in rolling back Trump era tariffs on imported goods from China and ease inflation burden on consumers. 

The decision on tariff rollback is expected as early as this week. 

Futures of crude oil plunged 8% to $99.51 a barrel and natural gas plunged 3.7% to $5.51 a unit. 

The crude oil futures plunged below $100 a barrel for the first time since May 11 after spiking as high as $130.50 a barrel in March following Russia's Ukraine invasion and the international price of oil spiked to $140 a barrel. 

The yield on 10-year U.S. Treasury notes declined 10 basis points to 2.802%. 

Energy stocks led the decliners after crude oil prices plunged in the early trading. 

Exxon Mobil Corp declined 4.5% to $83.71, Chevron dropped 4.2% to $140.35, and Occidental Petroleum fell 4.8% to $57.52. 

Halliburton, Marathon Oil, Schlumberger, EOG Resources, and ConocoPhillips declined more than 7.0%.  

Yum Brands declined 1.1% to $114.45 and the owner of fast food chains said the company is close to selling its operations in Russia. 

 Floor & Decor Holdings Inc gained 5.5% to $68.49 after two institutional investors took additional stake in the retailer. 

Restaurant Brand International declined 2.0% to $50.59 on no company specific news and the stock dropped below its 5-day moving average. 

Royal Gold, Inc declined 3.3% to $106.56 and Retirement Systems of Alabama increased its stake in the company to 86,123 shares. 

 

Euro Plunges to Twenty Year Low 

The euro accelerated its decline in the year so far and plunged to a two decade low. 

The euro declined 1.3% to $1.029 and extended this year's loss to 9% after skyrocketing energy prices has driven inflation in the currency zone to a four-decade high. 

 

Eurozone Private Sector Activities Growth Slows 

Industrial production in France was unchanged in May from the revised 0.3% decline in April, the France's statistical office or Insee said on Tuesday. 

Manufacturing rebounded 0.8% in May, construction output increased 0.4%, bit utility production declined 5.6% from a year ago. 

The eurozone private sector activity expanded at a slower pace in June after service sector growth slowed and the manufacturing sector contracted for the first time in two years, the final survey results from S&P Global reported on Tuesday.  

The final composite output index fell to 52.0 in June from 54.8 in May and any reading above indicates expansion and below shows contraction. 

 

European Markets Drop 2% 

Market indexes in Europe dropped more than 2% as fears of a recession escalated in the union on soaring inflation and no end in sight of a war in Ukraine.  

The DAX index fell 2.4% to 12,464.54, the CAC-40 index declined 2.4% to 5,810.58, and the FTSE 100 index dropped 2.6% to 7,047.26. 

Market worries were compounded after coronavirus infections flared up in easter region of China and local authorities imposed mass testing in at least three cities. 

Scandinavian Airlines SAS AB dropped 10.5% to 55 krona cents after the company sought bankruptcy protection in a U.S. court to accelerate its restructuring plan. 

Delivery Hero SE gained 1.5% to 35.69 euros after the delivery services provider said it has completed the acquisition GlovoApp23 S.A.

J Sainsbury Plc increased 1.1% to 210.68 pence after the retailer confirmed its full-year outlook. 

The retailer said total sales excluding fuel sales declined 4.5% in the sixteen week period ending on June 25. Grocery sales were down 2.4% in the period. 

The company confirmed  fiscal year 2022-23 underlying profit before tax of between