Stock futures slide after the S&P 500’s worst first half since 1970

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, the United States, June 15, 2022.

Brendan Mcdermid | Reuters

US stock futures fell Thursday night after the S&P 500 ended its worst first-half performance in decades.

Futures tied to the Dow Jones Industrial Average traded 114 points lower, or 0.4%. S&P 500 and Nasdaq 100 futures were each down 0.3%.

Micron Technology shares fell more than 2% in after-hours trading on disappointing fourth-quarter guidance.

Thursday marked the end of the second quarter and first half of the year. For the quarter, the S&P 500 fell more than 16% — its biggest quarterly drop since March 2020. In the first half, the broader market index fell 20.6%, marking its biggest first-half decline since 1970. It also plunged into bear market territory, more than 21% below a record high set in early January.

The Dow Jones Industrial Average and the Nasdaq Composite were not spared from the rush. The 30-stock Dow lost 11.3% in the second quarter, down more than 15% for 2022. The Nasdaq, meanwhile, suffered its biggest quarterly decline since 2008, losing 22.4%. Those losses drove the tech-heavy composite deep into the bear market, falling almost 32% from an all-time high set in November. It’s also down 29.5% year-to-date.

Those steep first-half and quarterly losses come as investors grapple with sky-high inflation and tighter monetary policy. The core index of personal consumption spending — the Federal Reserve’s preferred indicator of inflation — rose 4.7% year over year last month. While that was slightly below a Dow Jones estimate, it was still close to multi-decade highs.

The Fed, on the other hand, stepped up its efforts to contain inflation, raising the rate by 0.75 percentage points in June. That was the biggest rate hike since 1994.

Both factors have led to escalating recession fears. First-quarter GDP contracted 1.6%, and the Atlanta Federal Reserve’s GDPNow tracker points to a further 1% contraction in economic output for the second quarter.

“If we have any words of consolation, it’s that universal losses at this rate rarely occur in consecutive quarters, but that doesn’t mean further losses shouldn’t be expected,” wrote Marketfield Asset Management’s Michael Shaoul. ‚ÄúThis still seems to be midway through the story, the time when a previously ‘Pacific’ view is being replaced by something much stormier, and we have yet to see signs that the weather is about to turn for the better. “

Traders will get more economic data on Friday, with the latest ISM manufacturing index and construction spending numbers slated for release at 10:00am ET.

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