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Stock futures fall 1.5% as S&P 500 trails worst first half of year since 1970

U.S. stock index futures fell early Thursday morning as the S&P 500 prepares to wrap up its worst first half in decades.

Futures contracts linked to the Dow Jones Industrial Average lost 295 points, or 1.2%. S&P 500 futures fell 1.3% and Nasdaq 100 futures fell 1.5%.

Healthcare stocks pulled the market lower on Thursday after Universal Health Services released second-quarter earnings and revenue forecasts that fell short of expectations, citing lower patient volumes. Shares fell nearly 6% in premarket. Centene, Abiomed and PerkinElmer also lost around 5% each.

Furniture chain RH saw its shares fall around 9% after issuing a profit warning for the full year. Fellow home retailers Wayfair and Williams-Sonoma followed them lower, losing more than 4% each.

“The combination of slowing growth, fading EPS outlook and ongoing monetary tightening has weighed on equity sentiment for months and is causing consternation again this morning,” wrote Adam Crisafulli of Vital Knowledge.

The Dow and S&P 500 are on track for their worst three-month stretch since the first quarter of 2020, when Covid lockdowns sent stocks tumbling. The tech-heavy Nasdaq Composite has fallen more than 20% in the past three months, its worst period since 2008.

The S&P 500 is also on course for its worst first half since 1970, which has been dominated by a myriad of factors putting pressure on the markets. These include soaring inflation, Federal Reserve rate hikes, Russia’s ongoing war on Ukraine and Covid-19 lockdowns in China – all of which have helped stoke fears of a coming global recession.

A surge in bond yields earlier in the year and historically expensive stock valuations sent tech stocks down first, as investors turned away from growth-oriented sectors of the market. Rising rates make future earnings – like those promised by growing companies – less attractive.

The tech-heavy Nasdaq has been particularly hard hit this year. The index is now more than 30% below its all-time high of November 22. Some of the biggest tech companies have seen significant declines this year, with Netflix down 70%. Apple and Alphabet each lost around 22%, while Facebook parent Meta slid 51%.

The core personal consumption expenditure price index, the Fed’s preferred measure of inflation, rose 4.7% in May, the Commerce Department reported Thursday. That’s 0.2 percentage points lower than the previous month, but still around levels last seen in the 1980s. The index was expected to post a 4.8% year-on-year increase. another in May, according to Dow Jones.

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The Federal Reserve has moved aggressively to try to curb runaway inflation, which has reached its highest level in 40 years.

Cleveland Federal Reserve Chair Loretta Mester told CNBC she supports a 75 basis point hike at the central bank’s next meeting in July if current economic conditions persist. Earlier in June, the Fed raised its benchmark interest rate by three-quarters of a percentage point, the biggest increase since 1994.

Some Wall Street watchers worry that overly aggressive action could tip the economy into a recession.

“We don’t think the stock market has bottomed out yet and expect more declines to come. Investors should be holding high levels of cash at this time,” said George Ball, chairman of Sanders Morris Harris.

“We see the S&P 500 hitting a low of around 3,100 as the Federal Reserve’s aggressive but necessary inflation-fighting measures are likely to depress corporate earnings and lower stocks,” he said. -he adds.

On Wednesday, the Dow Jones advanced 0.27% for its first positive day in three. The S&P 500 and Nasdaq Composite both posted a third straight negative day, down 0.07% and 0.03%, respectively.

On the economic data front, weekly jobless claims will be the focus on Thursday. Economists polled by Dow Jones expect 230,000 new filers. Personal income and expenditure data will also be published.

Stock futures fall 1.5% as S&P 500 trails worst first half of year since 1970

Source link Stock futures fall 1.5% as S&P 500 trails worst first half of year since 1970

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