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Market Perspective for July 3, 2022


The markets completed the week within the unfavorable territory once more. It was the eleventh shedding week out of the previous 13 weeks for the S&P 500.

Inflation stays the primary concern, with the opportunity of a recession the second. For the week, the Dow Jones Industrial Common was down 1.3 p.c, the S&P 500 misplaced 2.2 p.c, and the Nasdaq misplaced one other 4.1 p.c.

As we come to the second half of the 12 months, the S&P 500 is down 21 p.c, making it the worst first half for the S&P 500 since 1970. Final month, the index was down 8.4 p.c, making it the worst month of June since 2008.

Whether or not we go into an precise recession or simply an financial slowdown is a guess, and a few economists consider we’re already in a recession. On the finish of July, we are going to get the primary estimate of the second-quarter GDP report, which ought to confirm if we’re certainly in a recession or not. A number of the monetary markets which might be indicating we’re in an financial slowdown embrace:

  • Shares: The S&P 500 is in a bear market and defensive shares are outperforming different sectors.
  • Bonds: The yield curve is flattening, the distinction between the 10-year and two-year yield, and the yields transfer decrease.
  • Commodity costs are rolling over and copper is dropping.
  • Forex: The greenback stays sturdy and continues to outperform as a protected haven.

Copper costs have been down 20 p.c within the second quarter, the biggest quarterly drop since 2011. The worth of copper is generally used as an indicator of financial traits, and copper dropping in value signifies concern.

The primary half of 2022 has seen all sectors of the S&P 500 fall apart from the vitality sector. The defensive sectors that embrace utilities, client staples and healthcare have performed higher than others, however have nonetheless recorded losses. Here’s a recap of all S&P 500 sectors for the primary half of the 12 months:

  • Vitality: + 29 p.c
  • Utilities: – 2 p.c
  • Client Staples: – 7 p.c
  • Well being Care: – 9 p.c
  • Industrials: – 17 p.c
  • Supplies: – 19 p.c
  • Financials: – 19 p.c
  • S&P 500: – 21 p.c
  • Actual Property: – 21 p.c
  • Info Expertise: – 27 p.c
  • Communication Companies: – 30 p.c
  • Client Discretionary: – 33 p.c

Total, the inventory market had its worst first half in over 50 years, with solely oil displaying a achieve. Right here is the ultimate tally of the main market indexes as of the shut on June thirtieth:

  • West Texas Intermediate: + 39 p.c
  • Greenback: + 9.3 p.c
  • Nikkei: – 9.8 p.c
  • Bonds: – 10.1 p.c
  • Dow Jones Industrial Common: -15.9 p.c
  • Stoxx Europe 600: – 16.9 p.c
  • S&P 500: – 21.1 p.c
  • Nasdaq: – 30.3 p.c
  • Bitcoin: – 59.6 p.c

Pending residence gross sales for Might have been up barely, however nonetheless 13.6 p.c decrease than Might 2021. The uptick in Might gross sales broke a streak of six months of declining demand. The slight improve is most probably as a consequence of a modest decreasing of mortgage charges in Might and extra properties got here available on the market.

Based on the S&P CoreLogic Case-Shiller Index, residence costs rose 20.4 p.c in April in comparison with April 2021. However the value will increase have been displaying indicators of slowing.

The 30-year fastened mortgage charge dropped barely final week to five.7 p.c. The dropping mortgage charges is an indication that inflation and recession worries are affecting the housing market. A 12 months in the past, the common 30-year mortgage stood at 2.98 p.c.

The Convention Board reported that U.S client confidence dropped to its lowest stage in 16 months as inflation worries, particularly about meals and gasoline, proceed to concern shoppers.

The Institute for Provide Administration launched its month-to-month report for June final Friday. The present Buying Managers Index (PMI) is at 53.0, a drop of three.1 from the earlier month and under the forecasted 54.9.

A studying above 50 signifies development or enlargement within the U.S. manufacturing sector. Along with inflation and recession worries, provide chain points are among the many main causes of the drop in June.



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