Wall: The reaction ‘disappeared’, the Dow down 200 points

LAST UPDATE: 17.20

New semester, same (bad) investment sentiment in the US stock market, which started the first session of the second half of the year with modest gains… for about half an hour, after the main Wall indexes quickly turned into the “red” on concerns about slowing economic growth, inflationary pressures, aggressive monetary policy from central banks, a slowdown in China due to the pandemic and Russia’s war in Ukraine to once again set the pace.

This explosive “cocktail” was captured on Wall yesterday with S&P 500 to record worst six-month period since 1970 with a plunge of more than 20% and the Dow Jones ending its worst half since 1962 losing 15.3%. The tech Nasdaq lost 29.5% in the biggest percentage decline of the three major indexes.

For the second quarter, the Dow fell 11.2%, the S&P 500 fell 16.4% and the Nasdaq fell 22.4%. At the June level, the corresponding losses were 6.7%, 8.4% and 8.7%. The Nasdaq posted its worst quarterly performance since 2008.

Wall fell in the first half on fears that moves by central banks to raise interest rates in response to persistently high inflation could shrink many advanced economies.

“The main reason for this decline is that the possibility of a global recession became visible in the second quarter,” Deutsche Bank said in a note to clients.

Central banks have misjudged inflation and are playing catch-up, even as aggressive policy tightening could trigger an economic downturn, according to Interactive Investor analyst Richard Hunter.

“The upcoming barrage of quarterly results will try to reverse the sentiment. It will not be an easy task, however, as margin pressures and an uncertain outlook remain,” he said in a note.

Indicators – Statistics

On the board, the industrialist Dow down 200 points, or 0.65%, at 30,570, the broadest S&P 500 and the technological one loses 0.5% to 3,765 points Nasdaq retreats by 0.48% around 10,975 units.

From the 30th shares that make up the Dow, 8 move with a positive sign and 22 with a negative. Home Depot recorded the biggest gains with an increase of more than 1%. On the other hand, Intel is at the bottom with losses of 3.35%, followed by Dow Inc, Cisco, Walgreens Boots and Caterpillar that lose more than 2%.

General Motors added 0.65%, despite warning of a second-quarter profit decline as vehicle sales were hit by a shortage of semiconductors and supply chain disruptions in general that are throwing off the company’s schedules.

Micron Technology slips 3.8% after downgrading its earnings outlook.

It is noted that the US market will remain closed on Monday due to the Independence Day holiday.

Macro

Significant slowdown in July for US manufacturing activity, with the relevant index PMI of S&P Global to tumble to a two-year low as inflationary pressures and disruptions to global supply chains continue to weigh on the US economy.

In particular, the manufacturing PMI fell to its lowest level since July 2020, slipping to 52.7 points from 57.0 points in May, according to final data released today by S&P Global. However, the final reading was slightly better than the initial estimate at 52.4 points.

The Institute for Supply Management (ISM) survey for the sector also showed a slowdown in manufacturing activity. In particular, the manufacturing PMI fell to 53 points from 56.1 points in May. This is the lowest reading of the index since June 2020.