4:14pm: Wall Street drags on the Dow
The Dow closed Thursday down 254 points, 0.8%, at 30,775, the Nasdaq Composite lost 149 points, 1.3%, to 11,029 and the S&P 500 dropped 33 points, 0.9% to 3,785.
With June trading officially closed, 2022 was the worst first half of a year for the S&P 500 since 1970.
Meanwhile among Dow components, the biggest laggard was Walgreens Boots Alliance Inc after the pharmaceutical company reiterated its projection of full-year earnings per share growth in the low single digits.
12.05pm: Wall Street losses continue
US stocks remained in the red at midday after discouraging consumer spending data has spurred renewed recession concerns amongst investors.
At noon, the Dow Jones Industrial Average was down 229 points at 30,801 points, the S&P 500 had shed 23 points at 3,796 points, and the Nasdaq Composite had slipped 88 points at 11,090 points.
OANDA senior market analyst Craig Erlam said stock markets had fallen heavily in June so it seemed only fitting that they were ending the month with big losses as reality continued to bite.
“The US economy is among the best positioned to fend off a recession but it's not completely immune to the cost-of-living crisis. It may be catching up,” he said.
ING chief international economist James Knightley noted that with US consumer spending sharply lower through the first four months of the year, and with May reporting an outright contraction, it was clear the trajectory of the US economy was not looking good.
He said that the dip in the core PCE Price Index in May was encouraging, but at 4.7% it was still more than double the Fed’s 2% target meaning the prospect of aggressive rate hikes was undimmed.
“Consumer confidence is already fragile while the housing market is making creaking sounds, and with more interest rate hikes to come and the squeeze on spending power from gasoline prices unlikely to be eased anytime soon, the prospects for second-half consumer spending are deteriorating,” Knightley said.
“There is a very clear threat that the prospect of recession is a late 2022 scenario rather than early 2023.”
10.53am: Proactive North America headlines:
BioSig Technologies gets repeat 'Outperform' tag, $4 price target from Noble Capital
NEO Battery says South Korean subsidiary to get Series A C$3M strategic investment from Automobile & PCB for first phase of commercial plant
Avalon GloboCare reveals new study using AI-powered protein design technology targeting glucose transporter against cancer
Ximen Mining unveils magnetic and lidar geophysical survey plans at Brett property in British Columbia
PlantX Life celebrates first anniversary of its XMarket location in Squamish, British Columbia
Bridgeline Digital inks new deal with SAGE Publishing for AI search platform Hawksearch to power publisher's online stores
BioLargo says Ultra Safe Nuclear has hired it to help develop first prototype fuel production systems for new MMR reactor
Todos Medical plans open label extension of Phase 2 trial of Tollovir in hospitalized Covid patients after encouraging biomarker data
KULR Technology partners with Taiwan's Molicel to propel battery safety and thermal management solutions strategy
Tesla targets more important than latest delivery figures, say broker
Cabral Gold wins key permits for Cuiú Cuiú gold district in northern Brazil
Regency Silver kicks off drilling at its Dios Padre silver property in Mexico
MedX Health announces $4M non-brokered private placement of Series III Convertible Loan Notes and grant of stock options
Snowline Gold Corp encounters widespread mineralization in hole V-22-007 at its Valley Zone; mobilizes second drill
Skye Bioscience gets regulatory approval for first-in-human Phase 1 clinical study of patented drug as potential treatment for glaucoma
Guardforce AI partners with Hong Kong's FLAIR to develop worldwide robotics solutions and AI cloud platforms
O3 Mining encouraged by drill results at Camflo extension deposit at Marban project, Quebec
Great Panther Mining divests Mexican silver assets
Amur Minerals vetting targets as it seeks to find buyer for Kun-Marie
Oragin Foods says Q1 results see short-term impact from renovations
Tocvan Ventures closes a private placement to an institutional investor to raise an aggregate amount of C$5.125M
9.35am: Consumer spending slows amid rising prices
US stocks plunged at the open as rising recession fears have continued to crush sentiment.
Just after the open, the Dow Jones Industrial Average had shed 462 points at 30,568 points.
The S&P 500 had dropped 51 points at 3,768 points and the Nasdaq Composite had shed 165 points at 11,013 points.
Headline inflation in the US as measured by the Personal Consumption Expenditures (PCE) Price Index remained unchanged in May at 6.3%, according to new data from the US Bureau of Economic Analysis.
The Fed’s preferred gauge of inflation – the core PCE Price Index - decreased slightly to 4.7% in the 12 months ending in May compared to 4.9% for the 12 months ending in April, in line with market expectations.
The data is a renewed indication that price pressures are beginning to ease after core inflation reached a 40-year-high of 5.2% for the 12 months ending in March.
However, the data also showed that purchases of goods and services decreased 0.4% in May, after a 0.3% gain in April as rising prices put pressure on consumers’ wallets.
AvaTrade chief market analyst Naeem Aslam noted, that while the latest data had brought mixed news for the markets and there were some improvements in the data, the data was still saggy.
“As for the price action, we do see more bids coming today on the back of this number as the data has worked in favor of lawmakers, but the drop in personal spending will keep traders on edge,” he said. “We are likely to see traders booking their profits a lot quicker.”
He added that the gold price was set to remain volatile. “We believe that there are still plenty of traders who want to hedge their risk in this uncertain environment, and that would save the precious metal price from falling off a cliff,” Aslam said.
6.30am: More falls ahead
US stocks were expected to open lower on Thursday with the twin concerns of runaway inflation and faltering growth once again dominating sentiment.
Futures for the Dow Jones Industrial Average were trading 0.9% lower pre-market, while those for the broader S&P 500 index were down 1.1% and futures for the tech-laden Nasdaq shed 1.4%.
“Jerome Powell, Christine Lagarde and Andrew Bailey blamed pandemic and the war for sending inflation off the chart at a European Central Bank event yesterday. We blame them for having called inflation transitory and having been left behind the curve for too long,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, referring to the head of the US Federal Reserve, the European Central Bank and the Bank of England respectively.
Price pressures across the globe have been building steadily and the central banks’ attempts to rein in inflation appear to have had little success so far, with key indicators of inflation continuing to rise while economic growth falters, creating a worst-of-both-worlds situation.
In closely watched remarks on Wednesday, the Federal Reserve chairman said he was concerned about the chances of failing to fight inflation and conceded that there is a possibility of interest rates rising too high which may, in turn, tip the economy into recession.
Up ahead, US PCE inflation data, due at 8.30am ET.
“But happily for the Federal Reserve, investors don’t care much about the PCE index, even though the latter is what the Fed is watching to determine whether inflation is in line with its policy,” noted Ozkardeskaya.
“The PCE index was at 6.3% last month, much lower than the CPI index as the PCE gives a lower weight to gasoline and rents, which sent CPI inflation skyrocketing. Therefore, even if the Fed could bring the PCE down to 2%, it won’t solve the problem of high energy, high rents,” she added.
Still, given that stock prices are already on a downtrend, a rise in yet another gauge of inflation might yet spark more selling.
In energy markets, WTI crude oil futures were down 0.1% at $109.64 a barrel while Brent crude futures were 0.04% lower at $112.41.
Contact the author at jon.hopkins@proactiveinvestors.com