A Rough First Half for Assets
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Key Takeaways

  • S&P 500 Down 21% in First Half
  • Potential Signs of Easing Inflation
  • Enjoy the Long Holiday Weekend

Thank goodness that’s over. First half 2022 will go down as a period investors would just as soon forget. The S&P 500 closed the first six months of the year down 21%, the worst first half start to a year since 1970. Bonds didn’t fare much better and crypto, well, let’s just say it was ugly and leave it at that.

As we kick off the second half of the year, there some potential reasons for optimism. I read a stat recently that said when the S&P 500 has fallen 15% or more in the first half of a year, something that has happened five times since 1932, it has posted an average gain of 24% in the second half of the year. This could be good news if recent signs that the worst of the inflationary pressures may have, at a minimum, stabilized.

Consumer spending for May was up just 0.2%. That is the smallest gain this year. And while May’s personal consumption expenditures index increased 6.3% from a year ago (matching April’s rate), when food and energy costs are stripped away, core inflation was up 4.7%. That marks the third consecutive monthly decline and perhaps signals an easing of inflation. All eyes will now shift to the June employment report which will come out a week from today, for signs of an easing job market.

Heading into today’s trading, there are a couple things for investors to keep in mind. First, we can expect trading to become thin as the day progresses, ahead of the holiday weekend. Second, earnings season will kick off this month and we’ll see how companies not only fared in the second quarter, but offer investors forward looking statements for the rest of the year.

In the more immediate future, S&P 500 and Nasdaq futures are down premarket. We’re also learning this morning that acquisition talks between Kohl’s and Vitamin Shoppe
VSI
parent Franchise Group
FRG
have broken down sending shares of Kohl’s down significantly in premarket trading. Shares of Micron are also indicated to open lower following disappointing earnings.

Finally, I just want wish everyone a Happy 4th! Watch some baseball. Eat some hotdogs and apple pie. Most importantly, after what has been a turbulent first half of the year, let’s keep in mind what really matters and enjoy time spent with friends, family and loved ones.

tastytrade, Inc. commentary for educational purposes only.

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