US stocks fell on Thursday, with key averages set to fall sharply in June and the first half of 2022 as fears of rising inflation and the prospect of a recession weighed on risky assets.
The S&P 500 fell about 0.2% at 12:48 ET, coming out of the lowest levels of the session when the index fell as much as 2.1%. The Dow fell about 100 points, or 0.3%, and the Nasdaq fell about 0.4%.
Shares remained lower in early trading after a new report showed that basic personal consumption spending – the Federal Reserve’s preferred inflation indicator – slowed slightly more than expected in May. This figure increased by 4.7% compared to last year compared to the expected increase of 4.8%, according to Bloomberg. Core inflation, which includes changes in energy and food prices, also rose slightly less than expected, or by 6.3% year on year to match the April pace. However, some data show that real personal spending fell by more than expected 0.4% in May after rising 0.7% in April, suggesting that consumers are withdrawing from some spending with inflation at current levels.
The sentiment to exclude risk in equities extends to other asset classes, including oil. West Texas crude futures fell below $ 110 a barrel, and bitcoin prices fell to just over $ 19,000.
Thursday’s price movement extended a series of declines for US stocks. They have been hit hard for months as investors constantly weigh hot inflation against the risks of an economic downturn as the Federal Reserve responds to inflation with a faster tightening. Federal Reserve Chairman Jerome Powell confirmed this week that the central bank’s main goal is to reduce inflation at its fastest pace in more than 40 years, suggesting that this goal will take precedence over fully maintaining activity elsewhere in the economy. .
NEW YORK, NEW YORK – JUNE 23: Traders work on the floor of the New York Stock Exchange during the morning trading on June 23, 2022 in New York. (Photo by Michael M. Santiago / Getty Images)
Is there a risk of going too far? Of course, there is a risk, “Powell said at the European Central Bank’s annual roundtable on economic policy in Portugal on Wednesday. “The biggest mistake you have to make – let’s put it this way – would be to fail to restore price stability.
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Earlier in June, Powell suggested that raising the interest rate by 50 or 75 basis points would most likely be on the table after the Fed’s meeting in July. In the coming weeks, a number of other key central bank officials confirmed that the latter would probably be the most appropriate option, with inflation and consumer inflation expectations rising.
Amid countless market fears, stocks are on track to end the worst first half of the year in decades. Based on Wednesday’s closing prices, the S&P 500 is expected to decline 19.9% in the first six months of the year – its worst performance since 1970. In June alone, the index is about to fall by 7 , 6%.
All 11 major sectors in the index are targeting monthly losses, with the cyclical sectors of energy, materials and finance being among the worst performing as fears of a recession revived. This leadership also reversed what was seen earlier this year, when energy stocks performed better amid rising oil and other energy commodities. The more protective sectors of healthcare, basic consumer goods and utilities performed better in June.
Both the Dow and the Nasdaq Composite also focused on significant monthly losses and losses since the beginning of the year. Towards Thursday’s close, the Dow fell 14.6 percent in the first half of the year and the Nasdaq fell nearly 29 percent.
In motion
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Shares of Bed Bath & Beyond (BBBY) rose after more than a 23% drop on Wednesday. The retailer reported sales in the same store that fell more than 20% in the last quarter, and also announced that CEO Mark Triton would leave the company and the board, taking effect immediately, and that board member Sue Gove will take over the management temporarily.
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Shares of RH (RH) fell after the furniture company cut its full-year forecasts to forecast revenue declines, citing a “deteriorating macroeconomic environment” and lower-than-expected demand. RH now sees revenue fall between 2% and 5% this year, up from previous sales forecasts of 2%.
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Constellation Brands (STZ) fell even after the beverage company published first-quarter results that exceeded estimates on most key indicators. Comparable earnings per share were $ 2.66 compared to the expected $ 2.50, according to Bloomberg, and net beer sales of $ 1.9 billion were $ 160 million better than expected.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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