Wall Street Sees Rough First Half of 2022

The second quarter and first half of 2022 ended on a dismal note

Digital Content Manager
Jul 1, 2022 at 2:52 PM
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It was a momentous week as Wall Street wrapped up June, the second quarter, and first half of 2022. After trading on both sides of the aisle on Monday, the Dow Jones Industrial Average (DJI) settled just below breakeven, as investors pondered whether stocks were oversold or had bottomed out. Upbeat durable-goods orders for May pared those losses, though the tech sector still tumbled as the 10-year Treasury yield rose. The Dow then went on to fall 491 points on Tuesday, while the S&P 500 Index (SPX) and Nasdaq Composite (IXIC) sold off as well, after the retail and semiconductor sectors took a beating. 

Modest gains finally came for the Dow on Wednesday, but comments from Federal Reserve Bank of Cleveland President Loretta Mester suggesting support for a 75 basis point rate hike in July weighed. Plus, revised gross domestic product (GDP) data for the first quarter showed the U.S. economy contracted. A massive hit followed on Thursday, with the S&P 500 logging its worst first half of the year since 1970, and the Dow and Nasdaq seeing their worst quarters since March 2020 and December 2008, respectively. Inflation and a possible recession was still at the top of traders' minds on Friday. At midday, the thee major indexes were looking to kick off the third quarter with steep weekly losses.

Seasonality Trends

As we enter the second half of 2022, it's a good opportunity to look into seasonality trends. Schaeffer's Senior Quantitative Analyst Rocky White has some key insights on how to play the Fourth of July holiday, and has conjured up a list of the best and worst stocks to own next week. For a more long-term perspective, White also has come up with a list of the best stocks to own this month, and the 25 stocks to avoid. If you are looking for an outperformer in the tech sector, Alphabet (GOOGL) is the best FAANG stock to own in July, while Costco (COST) and Cintas (CTAS) could also climb.

 

Blue-Chip Headlines

A handful of blue-chip stocks were in the spotlight this week. Nike (NKE) was among them, stepping into the earnings confessional to report a quarterly top-and-bottom line beat, though that was overshadowed by the company's weaker-than-expected current-quarter revenue expectations. Meanwhile, Walgreens Boots Alliance (WBA) ditched plans to sell its U.K. business following a lack of suitable offers, while Merck (MRK) looked like a solid bet for options bulls. Apple (AAPL) also drew attention, after J.P. Morgan Securities reiterated its "overweight" rating.

Movers & Shakers

Spirit Airlines (SAVE) was a big mover this week, after announcing plans to accept Frontier's (ULCC) improved cash-and-stock bid of $2.7 billion. Axsome Therapeutics (AXSM) surged after the Food and Drug Administration (FDA) proposed labeling for its depression drug candidate. Meanwhile, Bed Bath & Beyond (BBBY) shed over 20% after the departure of CEO Mark Tritton, and Kohl's (KSS) said it called off recent acquisition talks.

Employment Data in Focus Next Week

Though markets will be closed on Monday for Independence Day, the first full week of July brings a slew of employment indicators, such as nonfarm payrolls and jobs opening data, an unemployment rate update, and the labor force participation rate. A few notable indexes are also on tap, including the S&P Global U.S. services purchasing managers' index (PMI). Meanwhile, the earnings docket looks bare, with few names set to report aside from Levi Strauss (LEVI), PriceSmart (PSMT), and WD-40 (WDFC). Plus, now may be the right time to scale back into equities using the S&P 500 as a guidepost.

 

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