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Market Perspective for July 3, 2022

The markets completed the week within the damaging 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 potential of a recession the second. For the week, the Dow Jones Industrial Common was down 1.3 %, the S&P 500 misplaced 2.2 %, and the Nasdaq misplaced one other 4.1 %.

As we come to the second half of the 12 months, the S&P 500 is down 21 %, making it the worst first half for the S&P 500 since 1970. Final month, the index was down 8.4 %, 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.
  • Foreign money: The greenback stays robust and continues to outperform as a secure haven.

Copper costs had been down 20 % within the second quarter, the biggest quarterly drop since 2011. The value of copper is often 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 aside 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 %
  • Utilities: – 2 %
  • Client Staples: – 7 %
  • Well being Care: – 9 %
  • Industrials: – 17 %
  • Supplies: – 19 %
  • Financials: – 19 %
  • S&P 500: – 21 %
  • Actual Property: – 21 %
  • Info Expertise: – 27 %
  • Communication Providers: – 30 %
  • Client Discretionary: – 33 %

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

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

Pending dwelling gross sales for Might had been up barely, however nonetheless 13.6 % decrease than Might 2021. The uptick in Might gross sales broke a streak of six months of declining demand. The slight improve is more than likely on account of a modest decreasing of mortgage charges in Might and extra houses got here in the marketplace.

In accordance with the S&P CoreLogic Case-Shiller Index, dwelling costs rose 20.4 % in April in comparison with April 2021. However the value will increase had been displaying indicators of slowing.

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

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 beneath the forecasted 54.9.

A studying above 50 signifies progress or growth 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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