Thursday June 30th

U.S. stock market index futures declined early on Thursday morning, as the S&P 500 prepares to wrap its worst first half in decades. Futures contracts tied to the Dow Jones Industrial Average shed 295 points, or 1.2%. S&P 500 futures slipped 1.3%, and Nasdaq 100 futures pulled back by 1.5%. Healthcare stocks pulled the market lower Thursday after Universal Health Services issued second quarter earnings and revenue guidance below expectations, citing lower patient volumes. Shares fell almost 6% in the premarket. Centene, Abiomed and PerkinElmer also lost about 5% each. Home furnishings chain RH saw shares drop about 9% after it issued a profit warning for the full year. Other home retailers Wayfair and Williams-Sonoma followed them lower, losing more than 4% each. “The combination of slowing growth, fading EPS prospects, and ongoing monetary tightening has been weighing 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 period since the first quarter of 2020 when Covid lockdowns sent stocks tumbling. The tech-heavy Nasdaq Composite is down more than 20% over the last three months, its worst stretch since 2008. The S&P 500 is also on track for its worst first half of the year since 1970, which has been dominated by myriad factors pressuring markets. Those include surging inflation, Federal Reserve rate hikes, Russia’s ongoing war on Ukraine and Covid-19 lockdowns in China – all of which have helped fuel fears of a coming global recession. A surge in bond yields earlier in the year and historically pricey equity valuations sent tech stocks tumbling first, as investors rotated out of growth-oriented areas of the market. Rising rates makes future profits — like those promised by growth companies — less attractive. The tech-heavy Nasdaq has been hit especially hard this year. The index is now more than 30% below its Nov. 22 all-time high. Some of the largest technology companies have registered sizeable declines this year, with Netflix down 70%. Apple and Alphabet have each lost roughly 22%, while Facebook-parent Meta has slid 51%. The core personal consumption expenditures price index, the Fed’s preferred inflation measure, rose 4.7% in May, the Commerce Department reported Thursday. That’s 0.2 percentage points less than the month before, but still around levels last seen in the 1980s. The index was expected to show a year-over-year increase of 4.8% for May, according to Dow Jones. The Federal Reserve has taken aggressive action to try and bring down rampant inflation, which has surged to a 40-year high. Federal Reserve Bank of Cleveland President Loretta Mester told CNBC that she supports a 75 basis point hike at the central bank’s upcoming July meeting if current economic conditions persist. Earlier in June, the Fed raised its benchmark interest rate by three-quarters of a percentage point, which was the largest increase since 1994. Some Wall Street watchers are worried that too-aggressive action will tip the economy into a recession. “We do not believe the stock market has bottomed yet and we see further downside ahead. Investors should be holding elevated levels of cash right now,” said George Ball, chairman of Sanders Morris Harris. “We see the S&P 500 bottoming at around 3,100, as the Federal Reserve’s aggressive, but necessary inflation-fighting measures are likely to depress corporate earnings and push stocks lower,” he added. On Wednesday the Dow advanced 0.27% for its first positive day in three. The S&P 500 and Nasdaq Composite both posted a third straight negative day, declining 0.07% and 0.03%, respectively. Chinese markets rose on Thursday as government data showed factory activity grew in June, but most other Asia-Pacific indexes fell. The Shenzhen Component jumped more than 2% earlier in the session but gave up some of those gains to rise 1.573% to close at 12,896.2, and the Shanghai Composite advanced 1.10% to 3,398.62. The Hang Seng index in Hong Kong declined 0.57% in the final hour of trade, and the Hang Seng Tech index fell 1.46%. The Nikkei 225 in Japan dropped 1.54% to close at 26,393.04 while the Topix slipped 1.2% to1,870.82. South Korea’s Kospi declined 1.91% to 2,332.64, while the Kosdaq was 2.22% lower at 745.44. Oil prices dipped in volatile trading on Thursday as concerns over global supply appeared to outweigh a build in U.S. fuel product inventories as OPEC+ decided stick to its measured output strategy. Brent crude futures for September, the more actively traded contract, were down 96 cents, or 0.9%, at $111.49 a barrel. The August contract, which expires on Thursday, was down 78 cents, or 0.7%, at $115.48. U.S. West Texas Intermediate (WTI) crude futures fell $1.25, or 1.1%, to $108.53. The OPEC+ group of producers including Russia, on Thursday agreed to stick to its output strategy after two days of meetings, sources told Reuters. Gold fell on Thursday and was bound for its worst quarter in five as the dollar’s strength and a hawkish rhetoric from central banks eroded the appeal of the non-yielding asset. Spot gold fell 0.4% to $1,809.90 per ounce, en route to post a more than 6% fall for the quarter, and a third straight monthly fall. U.S. gold futures dipped 0.4% to $1,810.70.