The S&P 500 fell 20.6% through January to June 30, 2022, suffering its worst first half of a year since 1970 when it declined 21.0%. The technology heavy Nasdaq Composite was hit harder, it crashed to its worst first half yearly performance in its existence. Interest rates did the damage, investment-grade bonds, as measured by the iShares Core U.S. Aggregate Bond exchange-traded fund, lost 11%, their worst start to a year in history. The ongoing market volatility and headwinds couple with record low consumer sentiment have destroyed any structure of positivity. Trillions of dollars in market value have been wiped off. The S&P 500 closed -1.0% on June 30, meaning down 16.4% for the quarter and -20.6% for the year.
Sentiment is cruelled with inflation soaring as commodity prices hit 40-year highs, the yield on the benchmark 10-year Treasury over 3.0% to end June and the average for a 30-year fixed-rate mortgage at 5.81%. This is the highest level since November 2008 and well above the 3.11% recorded near the start of the year. These higher yields have hurt tech and growth stocks, making shares of firms whose profits may lie further out in time less attractive.
H1 2022 was brutal for many tech heavies, Tesla dropped 37%, Nvidia fell 49%, AMD declined 47%, Meta slid 53% and Netflix was skinned for 71%.
Major US Indices H1 2022
- Dow Jones Industrial Average: -15.3% YTD
- S&P 500: -20.6% YTDS&P 400: -20.2% YTD
- Russell 2000: -23.9% YTD
- Nasdaq Composite: -29.5% YTD
They realization of risk and overvalued stocks took a while as the market has lived in denial but the Federal Reserve raising interest rates, soaring inflation and the slovenly economy has brought stocks sharply lower from the record levels they started the year. The latest gross domestic product data showed that the economy recently contracted for the first time since early in the pandemic. The most recent earnings season has been dotted with some high-profile casualties, delivering head-spinning one-day crashes following the reports.
When Risk Explodes:
Nasdaq 100 Second Worse Performing Future in H1 2022, Heating Oil the Best
The Tech Wreck Has Been Travelling Down Fast
The FAANG stocks, consisting of the popular quintet of Facebook parent Meta Platforms, Apple, Amazon.com, Netflix and Google parent Alphabet, have lost $trillions combined in market value this year.
From The Traders Community Research Desk