Stocks fell on Thursday, with market benchmarks posting steep declines for the month of June, second quarter and the first half of 2022, as investors grew more concerned about the health of the overall economy. The Dow Jones Industrial Average dropped over 250 points on the day, while the S&P 500 and Nasdaq Composite fell about 0.9% and 1.3%, respectively.
Thursday's session marked the end of the first half of the year, with major averages recording their worst start to the year in decades. The S&P 500 ended the first six-months of 2022 down 20.6%, its worst since 1970, while the Dow dropped 15.3%, its worst since 1962. Notably, the Nasdaq fell 29.5%, marking its worst first half on record.
Stocks have been impacted over the past few months as investors weighed the impact of persistently high inflation on the health of the economy. Market participants also fear the Federal Reserve's hawkish response to inflation may spark a recession. Fed Chair Jerome Powell stoked economic downturn fears on Wednesday after he suggested that combating inflation will take priority over maintaining economic growth.
"Is there a risk we would go too far? Certainly there's a risk. I wouldn't' agree it's the biggest risk to the economy" Powell said at a European Central Bank forum on Wednesday. "The bigger mistake to make ... would be to fail to restore price stability."
Wall Street was lower on Thursday after new economic data showed core personal consumptions expenditures--typically used by the Federal Reserve's the gauge inflation--fell at a more-than-expected rate in May.
Here's how the market settled on Thursday:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
Inflation further pressures prices, spending in May:
Inflationary pressures remained high in May, and consumers pulled back on spending in response to rising prices, according to the Commerce Department's latest report.
The institution's personal consumption expenditures (PCE) price index rose 0.6% in May, following an increase of 0.2% in April. On an annual basis, PCE climbed 6.3%, matching April's gains and cooling slightly from March's reading of 6.6%.
Beneath the headline, Core PCE--which excludes more volatile food and energy prices--rose 4.7% year-over-year, a 0.2 percentage point lower than Aprils, but still at 40-year highs. On a monthly basis, Core PCE increased 0.3%.
Personal income rose 0.5% in May, but after taxes and other charges--known as disposable personal income--fell 0.1% on the month and 3.3% annually. Spending adjusted for inflation also fell 0.4%, declining from April's 0.3% gain but rose 2.1% year-over-year. Consumer spending accounts for nearly 70% of all economic activity in the United States.
