S&P 500 limps to close slightly lower as quarter-end nears

S&P 500 limps to close slightly lower as quarter-end nears
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  • The US economy contracted in the first quarter; consumer spending revised down
  • General Mills rises as sales outpace higher prices
  • Bed Bath & Beyond replaces CEO, shares fall
  • Dow up 0.27%, S&P down 0.07%, Nasdaq down 0.03%

NEW YORK, June 29 (Reuters) – The S&P 500 closed a swinging session slightly lower on Wednesday, as investors lurched toward the goal of a bearish month, a dismal quarter and the worst first half for the benchmark. Wall Street since President Richard Nixon’s first term.

All three major US stock indices spent much of the session trading between the red and the green. The Nasdaq joined the S&P 500, closing nominally lower, while the blue-chip Dow posted a modest gain.

“The market is struggling to find a direction,” said Megan Horneman, chief investment officer at Verdence Capital Advisors in Hunt Valley, Maryland. “We had disappointing data and the markets are looking forward to earnings season, when we will have more clarity” regarding future earnings and the economic slowdown.

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Apple Market Leaders (AAPL.O)Microsoft (MSFT.O) and (AMZN.O) provided the bullish muscle, while the economically sensitive tokens (.SOX) lowercase letters (.RUT) and transportation (.DJT) they underperformed the broader market.

With the end of the month and the second quarter a day away, the S&P 500 has set course for its biggest first-half percentage decline since 1970.

The Nasdaq was on track for its worst first-half performance on record, while the Dow appeared headed for its biggest January-June percentage decline since the financial crisis.

All three indices were bound to post their second consecutive quarterly declines. The last time it happened was in 2015.

“We have a central bank that has had to go from decades of easy money policy to a tightening cycle,” Horneman added. “This is news to many investors.”

“We are seeing a repricing for what we expect to be a very different interest rate environment going forward.”

The Dow Jones Industrial Average (.DJI) rose 82.32 points, or 0.27%, to 31,029.31, the S&P 500 (.SPX) lost 2.72 points, or 0.07%, to 3,818.83 and the Nasdaq Composite (.IXIC) it fell 3.65 points, or 0.03%, to 11,177.89.

Of the 11 major S&P 500 sectors, five lost ground on the day, with energy stocks (.SPNY) suffering the largest percentage drop. health care (.SPXHC) led the winners.

Benchmark Treasury yields have risen more than 1,606 percentage points so far in 2022, their largest average jump since 1984. That explains why interest-rate-sensitive growth stocks (.IGX) they have plummeted more than 26% so far this year.

A screen displays stock trading information on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 27, 2022. REUTERS/Brendan McDermid

Federal Reserve officials have in recent days reiterated their resolve to rein in inflation, setting expectations for their second consecutive 75 basis point interest rate hike in July, while expressing confidence that monetary tightening will not will drive the economy into recession. read more

In economic news, data from the US Commerce Department showed GDP contracted slightly more than previously indicated in the first three months of the year. Consumer spending, which makes up about 70% of the economy, contributed substantially less than originally reported. read more

A day earlier, a dire consumer confidence report showed consumer expectations sank to their lowest level since March 2013.

The second-quarter reporting season is several weeks away, and 130 of the S&P 500 companies have been previously announced. Of those, 45 have been positive and 77 have been negative, resulting in a negative/positive ratio of 1.7 stronger than the first quarter but weaker than a year ago, according to Refinitiv data.

What will investors be listening to on those earnings calls?

“Margin pressures, that’s the big concern, pricing pressures, reduced capex plans due to the slowdown and if you see any improvement in the supply chain,” Horneman said.

The packaged food company General Mills Inc. (GIS.N) jumped 6.3% after its sales beat estimates. read more

bed bath and beyond inc. (BBBY.O) fell 23.6% following the retailer’s announcement that it had replaced chief executive Mark Tritton, in hopes of reversing the slide. read more

FedEx Corp. (FDX.N) it fell 2.6% on the back of its disappointing margin forecast for its ground unit. read more

Down issues outnumbered up ones on the New York Stock Exchange by a ratio of 1.96 to 1; on Nasdaq, a ratio of 1.79 to 1 favored decliners.

The S&P 500 posted 1 new 52-week high and 36 new lows; the Nasdaq Composite recorded 14 new highs and 284 new lows.

Volume on US stocks was 11.55 billion shares, compared with the average of 12.79 billion over the past 20 trading days.

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Information from Stephen Culp; Additional reporting from Amruta Khandekar and Shreyashi Sanyal in Bangalore; Edited by David Gregory

Our standards: The Thomson Reuters Trust Principles.

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