Friday July 1st


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

U.S. stock market index futures slip Friday morning after the S&P 500 closed out its worst first-half performance in decades. Futures tied to the Dow Jones Industrial Average traded 79 points lower, or 0.3%. S&P 500 futures shed 0.2% and Nasdaq 100 futures fell 0.3%. Micron Technology fell more than 5% in premarket trading on the back of disappointing fiscal fourth-quarter guidance. Several other chipmakers fell more than 1% with it including Nvidia, Qualcomm and Marvel. Western Digital lost 3%. Shares of Kohl’s fell 18% premarket after it cut its outlook for the fiscal second quarter, citing softer consumer spending, and terminated talks to sell its business, saying the retail environment has deteriorated since the beginning of its bidding process. Thursday marked the end of the second quarter and the first half of the year. For the quarter, the S&P 500 fell more than 16% – its biggest one-quarter fall since March 2020. For the first half, the broader market index dropped 20.6% for its largest first-half decline since 1970. It also tumbled into bear market territory, down more than 21% from a record high set early January. The Dow Jones Industrial Average and Nasdaq Composite were not spared from the onslaught. The 30-stock Dow lost 11.3% in the second quarter, putting it down more than 15% for 2022. The Nasdaq, meanwhile, suffered its biggest quarterly drop since 2008, losing 22.4%. Those losses pushed the tech-heavy composite deep into bear market territory, down nearly 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 personal consumption expenditures index – the Federal Reserve’s preferred inflation gauge, rose 4.7% last month on a year-over-year basis. While that was slightly below a Dow Jones estimate, it was still near multidecade highs. The Fed, in turn, has stepped up its efforts against the surge in prices, hiking by 0.75 percentage point in June. That was its biggest rate increase since 1994. Both of these factors have resulted in escalating recession worries. First-quarter GDP contracted by 1.6%, and the Atlanta Federal Reserve’s GDPNow tracker is pointing to another 1% decline in economic output for the second quarter. “If we have any words of comfort, it is that universal losses at this pace rarely take place in successive quarters, but this is not the same as saying that further losses should not be anticipated,” wrote Michael Shaoul of Marketfield Asset Management. “This still very much looks to be the middle of the story, the period in which a previously ‘pacific’ outlook is replaced by something far stormier, and we are yet to see any signs that the weather is about to turn for the better.” Traders will take in more economic data Friday, with the latest ISM manufacturing index and construction spending numbers set for release at 10 a.m. ET. Asia-Pacific markets reversed earlier gains and fell on the first day of the new quarter as investors digested positive factory activity data from a private survey in China. The Nikkei 225 in Japan fell 1.73% to close at 25,935.62, and the Topix declined 1.38% to1,845.04. In South Korea, the Kospi also reversed course to fall 1.17% to 2,305.42, and the Kosdaq was 2.14% lower 729.48. Australia’s S&P/ASX 200 declined 0.43%. Mainland China markets were lower despite positive data on the manufacturing front. The Shanghai Composite shed 0.32%, while the Shenzhen Component was 0.28% lower. Markets in Hong Kong were closed on Friday for a holiday as the city commemorates the 25th anniversary of its handover from the U.K. to China on Friday. Oil prices rose 2% on Friday, recouping most of the previous session’s declines, as supply outages in Libya and expected shutdowns in Norway outweighed expectations that an economic slowdown could dent demand. Brent crude futures rose $2.61, or 2.4%, to $111.63 per barrel. WTI crude futures for August delivery rose $2.41, or 2.25%, to $108.15 per barrel. Both contracts fell around 3% on Thursday, ending the month lower for the first time since November. Gold prices edged lower on Friday, and were on track for a third straight weekly decline, as rising U.S. Treasury yields weighed on demand for zero-yield bullion. Spot gold was down 0.1% at $1,805.39 per ounce, as of 0103 GMT, after hitting a more than six-week low of $1,801.50 in the previous session. U.S. gold futures were flat at $1,806.40. Gold prices, coming off their worst quarter since early 2021 due to hawkish central banks and a soaring U.S. dollar, have lost about 1.2% this week. A stronger dollar makes gold more expensive for buyers holding other currencies.