S&P 500 Posts Worst First Half in 52 Years
The S&P 500 ended the first half of the year lower by 20.6%, its worst start to the year since 1970. The Dow ended at 30,775.43, dropping 15.3% year-to-date for its worst first half since 1962. The Nasdaq's 29.5% drop so far in 2022 marked its worst first half on record. A new report showed core personal consumption expenditures — the Federal Reserve's preferred inflation gauge — decelerated slightly more than expected in May. This metric rose by 4.7% over last year compared to the 4.8% increase anticipated. Headline inflation, which includes energy and food price changes, also rose slightly less than expected, or at a 6.3% annual rate to match April's pace. However, separate data showed real personal spending fell by a larger-than-expected 0.4% in May after a rise of 0.7% in April, suggesting consumers were pulling back on some spending with inflation at current levels. The risk-off mood in equities extended to other asset classes including oil. West Texas intermediate crude futures fell back below $110 per barrel, and bitcoin prices sank to just over $19,000. Federal Reserve Chair Jerome Powell this week reaffirmed that the central bank's main goal is bringing down inflation running at its fastest rate in over 40 years, suggesting that this aim will take priority over fully preserving activity elsewhere in the economy. “Is there a risk we would go too far? Certainly there’s a risk,” Powell said at the European Central Bank’s annual economic policy roundtable conference in Portugal. “The bigger mistake to make — let’s put it that way — would be to fail to restore price stability.” For the month of June alone, the S&P 500 slid by 7.6%. All 11 major sectors in the index are heading toward monthly losses, with the cyclical energy, materials and financials sectors among the worst performers as fears over a recession have resurged. That leadership also reversed what was seen earlier this year, when energy stocks and outperformed amid oil and other energy commodities' march higher. The more defensive healthcare, consumer staples and utilities sectors outperformed in June.