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US markets suffer their worst start to the year in over five decades

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US stocks tumbled on Thursday, setting the S&P 500 for its worst first six months since 1970 amid fears central banks determined to tame inflation will hamper global economic growth.

Ears of slowing growth and rising prices have swept through markets, with recession worries taking center stage as monetary policymakers around the world seek to aggressively raise borrowing costs.

Federal Reserve Chair Jerome Powell vowed on Wednesday not to let the US economy slide into a “higher inflation regime,” even if that means raising interest rates to levels that threaten growth.

The tech-heavy Nasdaq Composite was set for its biggest drop ever for the first half, while the Dow Jones Industrial Average was set for its biggest January-June percentage decline since the financial crisis.

All three major indices will post second consecutive quarterly declines for the first time since 2015.

Fed policymakers have in recent days been expecting a second 75 basis point rate hike in July, despite economic data painting a bleak picture for the American consumer.

“When earnings season starts, people raise money,” said Josh Wein, portfolio manager at Hennessy Funds.

“We’ve listened a lot to the Fed about what they’re going to do. A lot of people are waiting to hear from companies about what’s actually happening and how consumers are doing, trying to get additional information before really committing to stocks.”

Large-cap growth stocks like Microsoft, Apple, Amazon.com and Tesla fell between 2.6 percent and 5.2 percent, leading the daily decline.

A Commerce Department report showed that the price index for personal consumption spending in May came in slightly below expectations, although consumer spending rose less than expected.

“Many investors were expecting the inflation data to really come down. But what we’re finding is that it’s a lot harder and the inflation data is staying high longer and probably hasn’t peaked yet,” said Sam Stovall, chief investment strategist at CFRA.

By mid-morning, the Dow Jones Industrial Average fell 527.89 points, or 1.70 percent, to 30,501.42, the S&P 500 fell 73.94 points, or 1.94 percent, to 3,744.89, and the Nasdaq Composite fell 304.66 points, or 2.73 percent. at 10,873.23.

As we head into the second half of the year, troubled markets will continue to focus on inflation, unemployment and interest rate hikes and their impact on corporate earnings.

Drugstore chain Walgreens Boots Alliance slipped 5 percent as its quarterly profit plunged 76 percent, hurt by the opioid deal with Florida and a drop in US pharmacy sales due to slowing demand for Covid-19 vaccines.

At a 4.54-to-1 ratio on the NYSE and a 4.43-to-1 ratio on the Nasdaq, bearish issues outweighed the climbers.

The S&P index posted a new 52-week high and 42 new lows, while the Nasdaq posted nine new highs and 305 new lows.

https://www.independent.ie/business/world/us-markets-suffer-worst-start-to-year-in-over-five-decades-41805139.html US markets suffer their worst start to the year in over five decades

Fry Electronics Team

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