The first half of the year on the U.S. securities exchange has been the worst of any year since 1970. Investors are getting ready for a series of likely flashpoints in July that could set Wall Street’s course for the next few months.
After the S&P 500 fell 20.6% in the first half of 2022, events that could be important include corporate earnings for the second quarter, long-awaited data on U.S. growth, and the Federal Reserve’s meeting on monetary policy.
The mood on Wall Street is bad until we hear otherwise. Bonds, which investors rely on to make up for falling stock prices, have lost a lot of value, and the ICE BofA Treasury Index (.MERG0Q0) is on track to have its worst year ever.
In a new study by Deutsche Bank, about 90% of the people who took part said they thought the U.S. economy would go down by the end of 2023.
The Fed is the main cause of market unrest because it is quickly putting together a financial plan to fight the highest growth in many years. This comes after about two years of crisis estimates that helped stocks rise and sped up growth.
Eric Kuby, the head venture official at North Star Investment Management, said, “We could really use a little less bad news in July.” “In an ideal world, it would make the back half of 2022 look better.”
Sam Stovall, the head forecaster at CFRA, says that history “doesn’t offer very reassuring news” for those who think that the hopeless first half of the year will be followed by a jump in the second half.
Stovall said in a new report that after the 10 worst starts to the year for the S&P 500 since World War II, the file has gone up an average of 2.3% in the second and a half years of the year only a small number of times.
On the information side, covering business and growth will give investors a picture of how the economy is doing after the Fed has raised interest rates by 150 basis points.
A disappointing position report on Friday could make people even more worried about a likely downturn.
Next week will bring news about U.S. consumer prices. Last month, a report that was hotter than expected caused stocks to drop and led the Fed to raise interest rates by 75 basis points in June.
There have been signs lately that melting away is happening. Information released on Friday showed that U.S. manufacturing activity fell to its lowest level in two years in June. This came after a report earlier in the week showed that customer confidence in June was at its lowest level in 16 months.
“The most important question is whether growth or change will come first.” venture planner at Edward Jones Angelo Kourkafas said.
Second-quarter profits started to show up in full force during the week of July 11. This will demonstrate whether companies can continue to meet expectations despite flooding and other growth and development stresses.
Refinitiv IBES shows that experts expect quarterly income to grow by 5.6% from the same time last year. This is a bit less growth than the 6.8% growth that was predicted in early April.
Anthony Saglimbene, a global market planner at Ameriprise, said, “If companies can just agree on or even fight over lower expectations, I think that will be a good boost for stock prices.”
Planners at Goldman Sachs are less optimistic. They say that agreement edge figures show that income estimates are “logically too optimistic” and that edges for the middle S&P 500 companies will probably go down in a year “whether or not the economy goes into a downturn.”
“Even though investors are worried about the possibility of a recession, the stock market doesn’t seem to fully reflect the risks of losing money,“ Goldman wrote in a note this week.
July’s data should affect what the Fed does at its next meeting on July 26-27. At that meeting, rates are likely to go up by another 75 basis points.
Some financial backers think that slowing down growth will force the Fed to change its position sooner than policymakers think.
But analysts at Capital Economics disagreed. They wrote on Friday that such a quick change would go against how the central bank has been acting in recent years. I understand more
So, they said, “we don’t think that U.S. values and U.S. Treasurys will do well in the end.”
