Matthew Chandler 10 / July / 22

Wall Street: S&P finishes worst half-year since 1970, Nasdaq -29.5%

Third quarter starts with strong sales with fear of US recession

As of 7.45 am Italian time, Dow Jones futures fell by more than 300 points (-1%), and S&P 500 and Nasdaq futures fell by about 1% and 1.15%, respectively.

The S&P 500 has declined from its worst half-year in more than 50 years, since 1970, with an annualized loss of -20.6%.

The disadvantage even in yesterday's session with the US benchmark stock index, which lost almost 0.9%, at 3.785.38 points. The Dow Jones Industrial Average fell 253.88 points, or -0.8%, to 30,775.43, while the Nasdaq Composite lagged 1.3% to 11,028.74.

In the second quarter of 2022, the S&P 500 declined by more than -16%, which is the worst quarter since 2020, especially since the beginning of the global Covid-19 pandemic warning.

The index declined in the second quarter in a bear market, to a lower value of more than -21% than the previous record tested in early January.

The Dow Jones Industrial Average collapsed by 11.3% in the second quarter, resulting in losses since the beginning of the year of more than -15%; Nasdaq Composite suffered the worst quarter since 2008, with a crash of -22.4%, confirming the bear market phase, below almost -32% of the record tested in November 2021 and pipeline by 29.5%. and since the beginning of 2022.

Stocks have fallen in recent weeks, primarily due to fear of a hard landing in the US, which, it is feared, may be caused by a cycle of rate hikes in the US, which the Jerome Powell Fed is conducting to reduce inflation to the 2% target.

Economists and markets fear that too aggressive monetary restrictions needed by the Fed to ease inflationary pressures will eventually lead the US economy into recession.

The Fed, the Fed's monetary policy arm, will meet next July 26 to announce its rate decision, on July 27, after closing by 75 basis points at the last meeting in early June, which brought the value of money to a new range between 1.50% and 1.75%: monetary tightening has become the strongest since 1994, against inflation, who has been traveling to the US for the last 40 years.

In this regard, the publication of the report on consumption expenditures and personal income, which occurred yesterday, highlighted the slowdown in the main PCE index, the preferred parameter of the Federal Reserve System for monitoring inflation.

The fall made investors hope that inflation had finally peaked. A noticeable slowdown in consumer spending, however, weakened the already negative sentiment in the markets, supporting fears about the onset of a recession.

Year-on-year and in May, the PCE core index in the US grew by 4.7%, which is less than the + 4.8% expected by consensus, and slowed down compared to the previous growth of 4.9%.

The monthly trend increased by 0.3%, which is less than the expected +0.4%. And these figures are enough to hope that inflation is slowing down.

Instead, the headline PCE grew at an annualized rate of 6.3%, compared to April. On a monthly basis, the increase was 0.6%, accelerating from +0.2% in the previous month.

Looking at other numbers, personal income grew by 0.5% in May, as expected, while consumption expenditures, they slowed down, rising by 0.2% in May, compared with +0.9% in the previous month, below the growth expected from consensus, was +0.4%.

And this trend could be a wake-up call for the health of the American economy.

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Matthew Chandler
Matthew Chandler
Matthew Chandler 33 years old Born in Edinburgh. Married with one child. Graduate University of Cambridge, Psychology course 2011. Works at Acclaim Studios London.

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